4 Required information Problem 11-4A Warranty expense and liability estimation LO P4 rt 1 of 5 The following information applies to the questions displayed below) On October 29, 2016, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perp method. The razors have a 90-day warranty that requires the returned, the company dis oints company to replace any nonworking razor. When a razor is cards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is $15 and its retail selling price is $90 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 7% of dollar sales. The following transactions and events 2016 Nov. 11 Sold se razors for $7,200 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 16 razors that were returned under the warranty. 16 Sold 240 razors for $21,6e0 cash. 29 Replaced 32 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. 2017 Jan. 5 Sold 160 razors for $14,400 cash. 17 Replaced 37 razors that were returned under the warranty 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A Part 1 Mc Hill Type here to search