Required information [The following information applies to the questions displayed below.] A company 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, the company expects warranty costs to be approximately 4% of sales. Sales for the month of December are $550,000. Actual warranty expenditures in January of the following year were $20,500. Required: 1. Does this situation represent a contingent liability? Yes or No Yes No