cos Seved Required information Problem 11-4A (Algo) Estimating warranty expense and liability LO P4 The following information applies to the questions displayed below] On October 29, Lobo Company began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards 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 $70. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred. November 11 Sold 80 razors for $5,600 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. Replaced 16 razors that were returned under the warranty. Sold 240 razors for $16,800 cash. December 9 December 16 December 29 December 31 January 5 January 17 Replaced 32 razors that were returned under the warranty. Recognized warranty expense related to December sales with an adjusting entry. Sold 160 razors for $11,200 cash. Replaced 37 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A (Algo) Part 1 Required: 1. Prepare journal entries to record above transactions and adjustments View transaction list Journal entry worksheet 4 5 6 7 12 Record the sales revenue of 80 razors for $5,600 cash. Note Enter debits before credits. Date General Journal Debit Credit 5,600 Merchandise inventory 5,600 November 11 Cash < Prey 567 7 6 Required information Problem 11-4A (Algo) Estimating warranty expense and liability LO P4 [The following information applies to the questions displayed below.] On October 29, Lobo Company began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards 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 $70. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred. November 11 Sold Be razors for $5,600 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 16 razors that were returned under the warranty. December 16 December 29 December 31 January 5 January 17 Sold 240 razors for $16,800 cash. Replaced 32 razors that were returned under the warranty. Recognized warranty expense related to December sales with an adjusting entry. Sold 160 razors for $11,200 cash. Replaced 37 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A (Algo) Part 2 2. How much warranty expense is reported for November and for December? Warranty expense for November Warranty expense for December Required information Problem 11-4A (Algo) Estimating warranty expense and liability LO P4 [The following information applies to the questions displayed below.] On October 29, Lobo Company began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards 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 $70. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred. November 11 Sold 80 razors for $5,600 cash. November 38 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 16 razors that were returned under the warranty. December 16 Sold 240 razors for $16,800 cash. December 29 Replaced 32 razors that were returned under the warranty. December 31 January 5 Recognized warranty expense related to December sales with an adjusting entry. Sold 160 razors for $11,200 cash. January 17 Replaced 37 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A (Algo) Part 3 3. How much warranty expense is reported for January? Warranty expense < Prev Next