Exercise $8-15($Algo$)$ Record warranties $($LO$8-5)$

Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a $90-$day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately $5\%$ of sales. Sales for the month of December are $$560,000.$ Actual warranty expenditures in January of the following year were $$21,000.$

Required:

Does this situation represent a contingent liability?

& $3.$ Record the necessary entries in the Journal Entry Worksheet below.

What is the balance in the Warranty Liability account after the entries in Parts $2$ and $3?$

Complete this question by entering your answers in the tabs below.

Req $1$

Req $4$

Does this situation represent a contingent liability?

Does this situation represent a contingent liability?