TB EX Qu. 8-171 Rotary Tools sells power tools... Rotary Tools sells power tools and backs each product itsells 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 first year, sales are $900,000. Actual warranty expenses incurred so far are $12.000. 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.) View transaction list Journal entry worksheet > 1 2 Record warranty expense and warranty liability for the year based on 5% of sales Note: Enter debits before credits Debit Credit General Journal Transaction 1