Required information 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 $14 and its retail selling price is $80 in both 2016 and 2017 The manufacturer has advised the company to expect warranty costs to equal 9% of dollar sales. The following transactions and events occurred 2016 Nov. 11 Sold 10 razors for $6,400 cash. 30 Recognized warranty expense related to Novenber sales with an adjusting entry. Dec 9 Replaced 10 razors that were returned under the warranty. 16 Sold 240 razors for $19,200 cash. 29 Replaced 2 rotors that were returned under the warranty 31 Recognized warranty expense related to December sales with an adjusting entry. 2017 Hon. 5 sold 160 razors for $12,000 cash 17 Replaced 37 rators that were returned under the warranty: 31 Recognized warranty expense related to January sales with an adjusting entry. DALIA AA n. 1.1 Prepare journal entries to record above transactions and adjustments for 2016, Answer is not complete. Debit Credit General Journal No Date 6,400 1 Nov 11 Cash Sales 6,400 > 1,120 2 Nov 11 Cost of goods sold Merchandise inventory 1,120 O 576 3 Nov 30 Warranty expense Estimated warranty liability >> 576 224 4 Dec 09 Estimated warranty liability Merchandise inventory IS 224 5 19,200 Cash Dec 16 19,200 Sales 3,360 6 Dec 16 Cost of goods sold Merchandise inventory 3,360 O 7 Dec 29 352 96 Estimated warranty liability Warranty expense Merchandise Inventory > 83 448 GO 1.728 Dec 31 Wages expense Estimated warranty liability O 1,728 Required information 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 $14 and its retail selling price is $80 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 9% of dollar sales. The following transactions and events occurred. 2016 Nov. 11 Sold 80 razors for $6,400 cash. 30 Recognized warranty expense related to November sales with an adjusting entry, Dec 9 Replaced 16 razors that were returned under the warranty: 16 Sold 240 razors for $19,200 cash. 29 Replaced 32 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. 2017 Jan. 5 Sold 160 razors for $12,800 cash. 17 Replaced 32 rators that were returned under the warranty 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A Part 2 2. How much warranty expense is reported for November 2016 and for December 2016? Answer is complete but not entirely correct. IS 576 Warranty expense for November 2016 Warranty expense for December 2016 S 1.824 Required information 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 $14 and its retail selling price is $80 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 9% of dollar sales. The following transactions and events occurred. 2016 Nov. 11 Sold Be razors for $6,400 cash 30 Recognized warranty expense related to November soles with an adjusting entry. Dec 9 Replaced 16 razors that were returned under the warranty 16 Sold 240 razors for $19,200 cash 29 Replaced 32 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry Jan. 2017 5 Sold 160 razors for $12,500 cash. 17 Replaced 37 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry: Problem 11-4A Part 4 4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016? Answer is complete but not entirely correct. Estimated warranty liability balance $ 1.7283 Required information 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 $14 and its retail selling price is $80 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 9% of dollar sales. The following transactions and events occurred. 2016 Nov 11 Sold 80 razors for $6480 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 16 razors that were returned under the warranty. 16 Sold 240 razors for $19, 200, cash. 29 Replaced 32 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. 2017 Jan 5 Sold 160 razors for $12,000 cash 17 Replaced 3.razors that were returned under the warranty 31 Recognized warranty expense related to anuary sales with an adjusting entry. Problem 11-4A Part 5 5. What is the balance of the Estimated Warranty Liability account as of January 31, 2017 Answer is complete but not entirely correct. Estimated warranty liability balance $ 2.362