Required information Problem 11-4A Estimating warranty expense and liability LO P4 [The following information applies to the questions displayed below.] On October 29, Lobo Co. 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 $90. The company expects warranty costs to equal 5% of dollar sales. The following transactions occurred Nov. 11 Sold 70 razors for $6,300 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 14 razors that were returned under the warranty 16 Sold 210 razors for $18,900 cash. 29 Replaced 28 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. 5 Sold 140 razors for $12,600 cash. 17 Replaced 33 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. 1 Record the sales revenue of 70 razors for $6,300 cash. Record the cost of goods sold for 70 razors. 2 3 Record the estimated warranty expense at 5% of November sales. Record the replacement of 14 razors that were returned under the warranty. 4 Record the sales revenue of 210 razors for $18,900 cash. 5 Record the cost of goods sold for 210 razors. 6 Record the replacement of 28 razors that were returned 7 Record the estimated warranty expense at 5% of December sale 9 Record the sales revenue of 140 razors for $12,600 cash. 10 Record the cost of goods sold for 140 razors. 11 Record the replacement of 33 razors that were returned under the warranty. 12 Record the adjusting entry for warranty expense for the month of January. 2. How much warranty expense is reported for November and December? Warranty expense for November Warranty expense for December 3. How much warranty expense is reported for January? Warranty expense 4. What is the balance of the Estimated Warranty Liability account as of December 31? Estimated warranty liability balance 5. What is the balance of the Estimated Warranty Liability account as of January 31? Estimated warranty liability balance