Problem 11-4A Warranty expense and liability estimation LO P4 [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 perpetual inventory method. The razors have a 90-day warranty that requires the company to replace any nonworking razor. 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 $16 and its retail selling price is $70 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 8% of dollar sales. The following transactions and events occurred. 2016 Nov. 11 Sold 60 razors for $4,200 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 12 razors that were returned under the warranty. 16 Sold 180 razors for $12,600 cash. 29 Replaced 24 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. 2017 5 Sold 120 razors for $8,400 cash. 17 Replaced 29 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. Journal entry worksheet 1 2 3 4 5 6 7 8 Record the sales revenue of 60 razors for $4,200 cash. Note: Enter debits before credits. Date General Journal Debit Credit Nov 11 Journal entry worksheet Record the cost of goods sold for 60 razors. Note: Enter debits before credits. General Journal Debit Credit Date Nov 11 Journal entry worksheet Record the estimated warranty expense at 8% of November sales. Note: Enter debits before credits. General Journal Debit Credit Date Nov 30 Journal entry worksheet Record the sales revenue of 180 razors for $12,600 cash. Note: Enter debits before credits. Date General Journal Debit Credit Dec 16 Journal entry worksheet Record the cost of goods sold for 180 razors. Note: Enter debits before credits. General Journal Debit Credit Date Dec 16 Journal entry worksheet Record the sales revenue of 120 razors for $8,400 cash. Note: Enter debits before credits. Date General Journal Debit Credit Jan 05 Record entry Clear entry View general journal Journal entry worksheet Record the cost of goods sold for 120 razors. Note: Enter debits before credits. General Journal Debit Credit Date Jan 05 Record entry Clear entry View general journal Journal entry worksheet Record the replacement of 29 razors that were returned under the warranty. Note: Enter debits before credits. General Journal Debit Credit Date Jan 17 Record entry Clear entry View general journal Journal entry worksheet