Business, 06.04.2021 01:50, Gabyngreen

A company 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, the company expects warranty costs to be approximately 5% of sales. Sales for the month of December are $560,000. Actual warranty expenditures in January of the following year were $21,000. 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?

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A company restores and resells notebook computers. It originally acquires the notebook computers fro...