Problem 11-4A Warranty expense and liability estimation LO P4

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On October 29, 2012, 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 $60 in both 2012 and 2013. The manufacturer has advised the company to expect warranty costs to equal 8% of dollar sales. The following transactions and events occurred.

2012

Nov.	11	Sold 50 razors for $3,000 cash.
	30	Recognized warranty expense related to November sales with an adjusting entry.
Dec.	9	Replaced 10 razors that were returned under the warranty.
	16	Sold 150 razors for $9,000 cash.
	29	Replaced 20 razors that were returned under the warranty.
	31	Recognized warranty expense related to December sales with an adjusting entry.

2013

Jan.	5	Sold 100 razors for $6,000 cash.
	17	Replaced 25 razors that were returned under the warranty.
	31	Recognized warranty expense related to January sales with an adjusting entry.

.	What is the balance of the Estimated Warranty Liability account as of January 31, 2013?