Required information [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 $16 and its retail selling price is $70. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred. Nov. 11 Sold 80 razors for $5,600 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. 9 Replaced 16 razors that were returned under the warranty. 16 Sold 240 razors for $16,800 cash. 29 Replaced 32 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. 5 Sold 160 razors for $11,200 cash. 17 Replaced 37 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. Dec. 1. Prepare journal entries to record above transactions and adjustments. Journal entry worksheet 2 3 4 5 6 7 8 12 > Record the sales revenue of 80 razors for $5,600 cash. Note: Enter debits before credits. Date General Journal Debit Credit Nov 11 Cash 5,600 Sales 5,600 Record entry Clear entry View general journal Journal entry worksheet Record the cost of goods sold for 80 razors. Note: Enter debits before credits. Date General Journal Debit Credit Nov 11 Cost of goods sold Merchandise inventory Record entry Clear entry View general journal Journal entry worksheet Record the estimated warranty expense at 7% of November sales. Note: Enter debits before credits. Date General Journal Debit Credit Nov 30 Warranty expense Estimated warranty liability Record entry Clear entry View general journal Journal entry worksheet Record the replacement of 16 razors that were returned under the warranty. Note: Enter debits before credits. Date Debit Credit Dec 09 General Journal Estimated warranty liability Merchandise inventory Record entry Clear entry View general journal Journal entry worksheet Record the sales revenue of 240 razors for $16,800 cash. Note: Enter debits before credits. Date General Journal Debit Credit Dec 16 Cash 16,800 Sales 16,800 Record entry Clear entry View general journal Journal entry worksheet Record the replacement of 32 razors that were returned under the warranty. Note: Enter debits before credits. Date General Journal Debit Credit Dec 29 Estimated warranty liability Merchandise inventory Record entry Clear entry View general journal Journal entry worksheet Record the estimated warranty expense at 7% of December sales. Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 Warranty expense Estimated warranty liability Record entry Clear entry View general journal Journal entry worksheet Record the cost of goods sold for 160 razors. Note: Enter debits before credits. Date Debit Credit Jan 05 General Journal Cost of goods sold Merchandise inventory Record entry Clear entry View general journal Journal entry worksheet
