Question
Required information Skip to question [The following information applies to the questions displayed below.] On October 29, Lobo Company began operations by purchasing razors for
Required information
Skip to question
[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 $13 and its retail selling price is $60. The company expects warranty costs to equal 6% of dollar sales. The following transactions occurred.
November 11 | Sold 60 razors for $3,600 cash. |
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November 30 | Recognized warranty expense related to November sales with an adjusting entry. |
December 9 | Replaced 12 razors that were returned under the warranty. |
December 16 | Sold 180 razors for $10,800 cash. |
December 29 | Replaced 24 razors that were returned under the warranty. |
December 31 | Recognized warranty expense related to December sales with an adjusting entry. |
January 5 | Sold 120 razors for $7,200 cash. |
January 17 | Replaced 29 razors that were returned under the warranty. |
January 31 | Recognized warranty expense related to January sales with an adjusting entry. |
2. How much warranty expense is reported for November and for December?
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