The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2021 . Classical's fiscal year ends on December 31. Financial statements are issued in April 2022. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 5% of sales. Sales were $2.2 million (all credit) for 2021 . Actual warranty expenditures were $46,500 and were recorded as warranty expense when incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 3% of credit sales will eventually prove uncollectible. 3. In December 2021, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23,2022 , Classical reached a settlement with state authorities to pay $1.7 million in penalties. 4. Classical is the plaintiff in a $4.2 million lawsuit filed against a supplier. The suit is in final appeal and attorneys advise that it is virtually certain that Classical will win the case and be awarded $2.7 million. 5. In November 2021, Classical became aware of a design flaw in an industrial saw that poses a potential electrical hazard. A product recall appears unavoidable. Such an action would likely cost the company $520,000. 6. Classical offered $20 cash rebates on a new model of jigsaw. Customers must mail in a proof-of-purchase seal from the package plus the cash register receipt to receive the rebate. Experience suggests that 70% of the rebates will be claimed. Ten thousand and two hundred of the jigsaws were sold in 2021. Total rebates to customers in 2021 were $107,000 and were recorded as promotional expense when paid. Required: Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Prepare the year-end entries for any amounts that should be recorded as a result of each of the above contingencies. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)