Required information Problem 9-4A (Algo) Estimating warranty expense and liability LO P4 [The following information applies to the questions displayed below.] On October 29, Lobo Company 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 $15 and its retail selling price is $70. The company expects warranty costs to equal 6% of dollar sales. The following transactions occurred. Novenber 11 Sold 70 razors for $4,900 cash. Novenber 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 14 razors that were returned under the warranty. Decenber 16 Sold 210 razors for $14,700 cash. December 29 Replaced 28 razors that were returned under the warranty. December 31 Recognized warranty expense related to December sales with an adjusting entry. January 5 Sold 140 razors for $9,800 cash. January 17 Replaced 33 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 9.4A (Algo) Part 4 4. What is the balance of the Estimated Warranty Liability account as of December 31 ? Required information Problem 9-4A (Algo) Estimating warranty expense and liability LO P4 [The following information applies to the questions displayed below.] On October 29, Lobo Compary began operations by purchasing razors for fesale. 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 $15 and its retail selling price is $70. The company expects warranty costs to equal 6% of dollar sales. The following transactions occurred. Noveaber 11 5old 70 razors for $4,900 cash. Novenber 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 14 razors that were returned under the warranty. December 16 Sold 210 razors for $14,700 cash. December 29 Replaced 28 razors that were returned under the warranty; December 31 Recognized warranty expense related to Decenber sales with an adjusting entry. January 5 5old 140 razors for $9,830 cash. January 17 Replaced 33 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 9-4A (Algo) Part 5 5. What is the balance of the Estimated Warranty Liability account as of January 31
