Rotary Tools sells power tools and backs each product it sells with a one-year warranty against defects. Based on previous experience, the company expects warranty costs to be approximately 5% of sales. By the end of the year, sales and actual warranty expenditures are dollar 750,000 and dollar 11,000, respectively. Does this situation represent a contingent liability? Record warranty expense and warranty liability for the year based on 5% of sales. Record the reduction in warranty liability for the actual warranty expenditures incurred during the year. What is the balance in the Warranty Liability account after the entries in parts 2 and 3