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 companys 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.

November 11Sold 105 razors for $7,875 cash.November 30Recognized warranty expense related to November sales with an adjusting entry.December 9Replaced 15 razors that were returned under the warranty.December 16Sold 220 razors for $16,500 cash.December 29Replaced 30 razors that were returned under the warranty.December 31Recognized warranty expense related to December sales with an adjusting entry.January 5Sold 150 razors for $11,250 cash.January 17Replaced 50 razors that were returned under the warranty.January 31Recognized warranty expense related to January sales with an adjusting entry.

3. How much warranty expense is reported for January?