Rotary Based on previous experience, the company expects the end of the first year, sales and actual warranty expenditures are $700,000 and $11,000, respectively. Tools sells power tools and backs each product it sells with a one-year warranty against defects. warranty costs to be approximately 5% of sales. By 1. Does this situation represent a contingent liability? O Yes O No 2. Record warranty expense and warranty liability for the year based on 5% of sales. (Omit the "S" sign in your response.) General Journal (Click to select) (Click to select) 3. Record warranty liability and the reduction in cash of $11,000 incurred during the year. (Omit the "s" sign in your response.) General Journal Credit (Click to select) (Click to select) 4. What is the balance in the Warranty Liability account after the entries in parts 2 and 3? (Omit the "$" sign in your response.) Warranty liability