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 $14 and its retail selling price is $70. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred. Novenber 11 sold B0 razors tor $5,600 cash. kovenber 30 Pecognized warrasty expense related to Novenber ga1es mith an adjusting ebtry. becenber 9 Meplaced 15 razor that were returaed under the warranty. Decenber 16 sold 240 rarors tor 516,800 eash. Decenber 29 heplaced 32 razore that were returned under the warranty, Decenber 31 llecognined warrasty expenae related to Decenber galen with an adjustibg entry. Jasuary 5 sold 160 razors for $11,200 eash. January 17 geplaced 37 ratorn that vere returaed under the warrasty. January 31 Recognieed warranty expense related to January oales with an adjusting entry. Problem 11-4A (Algo) Part 1 Required: 1. Prepare journal entries to record above transactions and adjustments. \begin{tabular}{|l|l|} 1 & Record the sales revenue of 80 razors for $5,600 cash. \\ \hline 2 & Record the cost of goods sold for 80 razors. \\ \hline 3 & Record the estimated warranty expense at 8% of \\ & November sales. \\ 4 & Recordthereplacementof16razorsthatwerereturnedunderthewarranty. \end{tabular} 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 Merehandise Inventory to the customer. The company's cost per new tazor is $14 and its retail selling price is $70. The company expects warranty costs to equal 8% of dollar sales. The following transections occurred. hovenber 11 sold 80 razors for $5,600 cash. fiovenber 30 Recognized warranty expense related to novenber sales with an adjugting entry. Decenber? 3 leplaced 16 razore that were returbed ubder the varrabty. Decenber 16 sold 240 razors for $16,300 cash. Decenber 29 leplaced 32 ranore that were retarbed under the varkanty. Decenber 31 Reoognized warranty expense related to Decenber sales with an adjuating estry. Janwary 5 flold 160 razora for $11,200 eash. January 17 Replaced 37 razori that vere returned under the varranty. January 31 lecognizad warranty expenae related to January anleu vith an adjuating entry. Problem 11-4A (Algo) Part 2 2. How much warranty expense is reported for November and for December? Required information Problem 11-4A (Algo) Estimating warranty expense and liability LO P4 [The following information appiles to the questions displayed beiow.] 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 $14 and its retail selling price is $70. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred. November 11 sold 80 razors tor $5,600 casb. Novenber 10 Hecognized varranty expense related to kovenber eales with an adjuating eotry. Decenber? heplaced 16 razorn that were returbed bader the warranty. Decenber 16 sold 240 razore tor $16,1000 eash. Decenber 29 leplaced 32 razora that vere returned under the warkanty. Decenber 31 Recognized varranty expense related to Decenber lalee with an adjuating entry. January 5 sold 160 razori for $11,200 ceah. January 17 Meplaced 37 razora that were returned under the warranty. January 31 pecognised varranty expense related to Jansary sales vith an adjuating entry. Problem 11-4A (Algo) Part 3 3. How much warranty expense is reported for January
