Maxim Limited, a new company, made sales of 10,000 units at a cost of $40 per unit. The company offers a one-year warranty that replaces any defective units with a new one. The company estimated warranty replacements at 5 percent of units sold. Maxim’s actual warranty replacements were 475 units. Record sales, warranty expense, and warranty payments. How much is Maxim’s estimated warranty payable at the end of the period?

How does a contingent liability differ from an actual liability?