Computer Wholesalers restores and resells notebook computers.

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 4% of sales. Sales for the month of December are $430,000. Actual warranty expenditures in January of the following year were $14,500.

 8.

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Required:

1. Does this situation represent a contingent liability?

Yes

No

 9.

2. & 3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

a) Record in the journal the contigent liability for warranties.

b) Record in the journal the actual warranty expenditures.

 10.

4. What is the balance in the Warranty Liability account after the entries in Part 2 and 3?

11º OS Environmental provides cost-effective solutions for managing regulatory requirements and environmental needs specific to the airline industry. Assume that on July 1 the company issues a one-year note for the amount of $4.9 million. Interest is payable at maturity.  

Required:

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