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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 first year, sales are $700.000. Actual warranty expenses incurred so far are $13,000. 1. Does this situation represent a contingent liability? Yes O NO 2. & 3. Record the appropriate joumal 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 Record warranty expense and warranty liability for the year based on 5% of sales. Note: Enter debits before credits Transaction General Journal Debit Credit 1 Record entry Clear entry View general journal Journal entry worksheet