In 2023, Capstone Inc. introduced a new line of televisions that carry a two-year warranty against manufacturer\'s defects. Based on past experience with similar products, warranty costs are expected to be approximately 1% of sales. Sales were $6,000,000 in 2023 and actual warranty expenditures were $29,000. Assume that all sales are on credit. Required:

1) What are the two conditions for a contingent liability to be accrued (reported on the balance sheet)?

2) Prepare journal entries to record:

a) Warranty expense for 2023.

b) Actual warrant expenditure made in 2023 ($29,000).