Computer wholesalers restores and resells notebook computers. it originally acquires the notebook computers from
corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against
defects. based on previous experience, computer wholesalers expects warranty costs to be approximately 6% of sales.
sales for the month of december are $600,000. actual warranty expenditures in january of the following year were
$13,000.

required:

1, does this situation represent a contingent liability? why or why not?

2 record warranty expense and warranty liability for the month of december based on 6% of sales.

3. record the payment of the actual warranty expenditures of $13.000 in january of the following year.

4. what is the balance in the warranty liability account after the entries in requirements 2 and 3?