On October $29,$ Lobo Company began operations by purchasing razors for resale. The razors have a $90-$day warranty When a razor is retumed, the company discards it and mails a new one from Merchandise inventory to the customer. The company's cost per new razor is $$20$ and its retail selling price is $$75.$ The company expects warranty costs to equal $8\%$ of dollar sales. The following transactions occurred.Required:

Prepare joumal entries to record above transactions and adjustments.