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 4% of sales. By the end of the first year, sales are $800,000. Actual warranty expenses incurred so far are $13,000. 1. Does this situation represent a contingent liability? Yes No 2. \& 3. Record the appropriate journal entries for the warranties. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Journal entry worksheet Record warranty expense and warranty liability for the year based on 4% of sales. Note: Enter debits before credits