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 $13 and its retail selling price is $60 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 70 razors for $4,200 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 $12,600 cash. 29 Replaced 28 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. 2017 Jan. 5 Sold 140 razors for $8,400 cash. 17 Replaced 33 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. No Date General Journal Debit Credit 1 Nov 11 Cash 4,200 Sales 4,200 2 Nov 11 182 Cost of goods sold Merchandise inventory 182 3 Nov 30 378 Warranty expense Estimated warranty liability 378 4 Dec 09 Estimated warranty liability Merchandise inventory 5 Dec 16 Cash Sales 6 Dec 16 Cost of goods sold Merchandise inventory 7 Dec 29 Estimated warranty liability Merchandise inventory 8 8 Dec 31 Warranty expense Estimated warranty liability 1.2 Prepare journal entries to record above transactions and adjustments for 2017. 5 View transaction list View journal entry worksheet No Date General Journal Debit Credit 1 Jan 05 Cash Sales