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 $13 and its retail selling price is $60. The company expects warranty costs to equal 5% of dollar sales. The following transactions occurred. Nov. 11 Sold 60 razors for $3,600 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. 9 Replaced 12 razors that were returned under the warranty. Dec. 16 Sold 180 razors for $10,888 cash. 29 Replaced 24 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. Sold 120 razors for $7,200 cash. 17 Replaced 29 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry.
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 $13 and its retail selling price is $60. The company expects warranty costs to equal 5% of dollar sales. The following transactions occurred. Nov. 11 Sold 60 razors for $3,600 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. 9 Replaced 12 razors that were returned under the warranty. Dec. 16 Sold 180 razors for $10,888 cash. 29 Replaced 24 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. Sold 120 razors for $7,200 cash. 17 Replaced 29 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter9: Working Capital
Section: Chapter Questions
Problem 33E
Related questions
Question
![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 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 $13 and its retail selling price is $60. The company expects warranty costs to equal 5% of
dollar sales. The following transactions occurred.
Nov. 11 Sold 60 razors for $3,600 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec.
9 Replaced 12 razors that were returned under the warranty.
16 Sold 180 razors for $10,800 cash.
29 Replaced 24 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
Jan. Sold 120 razors for $7,200 cash.
17 Replaced 29 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
Problem 9-4A (Algo) Part 1
Required:
1. Prepare journal entries to record above transactions and adjustments.
Required information
Journal entry worksheet
12
2
5
67
Record the sales revenue of 60 razors for $3,600 cash.
Note: Enter debits before credits.
Credit
General Journal
Date
Nov 11
Record entry
Clear entry
View general journal
16 of 25
Required information
Journal entry worksheet
< 1
3
4
5
6
12
8
Record the cost of goods sold for 60 razors.
Note: Enter debits before credits
Date
General Journal
Nov 11
Record entry
Clear entry
Required information
Journal entry worksheet
< 1
2
3
5
6
7
8
Record the estimated warranty expense at 5% of November sales.
Note: Enter debits before credits,
General Journal
Debit
Credit
Date
Nov 30
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
<
1
2
3
5
6
7
8
12
>
Record the replacement of 12 razors that were returned under the warranty.
Note: Enter debits before credits
Date
General Journal
Debit
Credit
Dec 09
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
12
< 1 2 3 4
7
8
Record the sales revenue of 180 razors for $10,800 cash.
Note: Enter debits before credits
General Journal
Debit
Date
Dec 16
Record entry
Clear entry
Required information
Journal entry worksheet
1
2
5
Record the cost of goods sold for 180 razors
Note: Enter debits before credits
Date
General Journal
Dec 16
Record entry
Clear entry
< Prev
6
Debit
12 13 14
7
8
Debit
7
8
Debit
Credit
View general journal
12
Credit
View general journal
12
Credit
View general journal
Next](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa43ff9e7-1f28-4706-a372-72c39de156b8%2F72eb1ac4-3953-4816-b811-55925c1bae31%2Ffc6z5ob_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 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 $13 and its retail selling price is $60. The company expects warranty costs to equal 5% of
dollar sales. The following transactions occurred.
Nov. 11 Sold 60 razors for $3,600 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec.
9 Replaced 12 razors that were returned under the warranty.
16 Sold 180 razors for $10,800 cash.
29 Replaced 24 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
Jan. Sold 120 razors for $7,200 cash.
17 Replaced 29 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
Problem 9-4A (Algo) Part 1
Required:
1. Prepare journal entries to record above transactions and adjustments.
Required information
Journal entry worksheet
12
2
5
67
Record the sales revenue of 60 razors for $3,600 cash.
Note: Enter debits before credits.
Credit
General Journal
Date
Nov 11
Record entry
Clear entry
View general journal
16 of 25
Required information
Journal entry worksheet
< 1
3
4
5
6
12
8
Record the cost of goods sold for 60 razors.
Note: Enter debits before credits
Date
General Journal
Nov 11
Record entry
Clear entry
Required information
Journal entry worksheet
< 1
2
3
5
6
7
8
Record the estimated warranty expense at 5% of November sales.
Note: Enter debits before credits,
General Journal
Debit
Credit
Date
Nov 30
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
<
1
2
3
5
6
7
8
12
>
Record the replacement of 12 razors that were returned under the warranty.
Note: Enter debits before credits
Date
General Journal
Debit
Credit
Dec 09
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
12
< 1 2 3 4
7
8
Record the sales revenue of 180 razors for $10,800 cash.
Note: Enter debits before credits
General Journal
Debit
Date
Dec 16
Record entry
Clear entry
Required information
Journal entry worksheet
1
2
5
Record the cost of goods sold for 180 razors
Note: Enter debits before credits
Date
General Journal
Dec 16
Record entry
Clear entry
< Prev
6
Debit
12 13 14
7
8
Debit
7
8
Debit
Credit
View general journal
12
Credit
View general journal
12
Credit
View general journal
Next
![Required information
Journal entry worksheet
<
1
2
3
4
5
6
12
8
Record the replacement of 24 razors that were returned under the warranty.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Dec 29
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
4
5
6
7
12
Record the estimated warranty expense at 5% of December sales.
Note: Enter debits before credits.
General Journal
Debit
Credit
Date
Dec 31
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
<
1
4
5
6
7
8
9
12
Record the sales revenue of 120 razors for $7,200 cash.
Note: Enter debits before credits,
Date
General Journal
Credit
Jan 05
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
< 1
7
6
12
8
Record the cost of goods sold for 120 razors.
Note: Enter debits before credits.
General Journal
Credit
Date
Jan 05
Record entry
Clear entry
View general Journal
Required information
Journal entry worksheet
55
6
7
8 9
10
11
12
Record the replacement of 29 razors that were returned under the warranty.
Note: Enter debits before credits
General Journal
Debit
Credit
Date
Jan 17
Record entry
Clear entry
View general journal
Required information
7
8
9
1
10
Journal entry worksheet
5
Record the adjusting entry for warranty expense for the month of January.
11 135
Note: Enter debits before credes
Date
General Journal
Debit
Credit
Jan 31
Record entry
Clear entry
View general journal
9
10
Debit
Debit
تن
Check my work](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa43ff9e7-1f28-4706-a372-72c39de156b8%2F72eb1ac4-3953-4816-b811-55925c1bae31%2F28qe0dse_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
Journal entry worksheet
<
1
2
3
4
5
6
12
8
Record the replacement of 24 razors that were returned under the warranty.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Dec 29
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
4
5
6
7
12
Record the estimated warranty expense at 5% of December sales.
Note: Enter debits before credits.
General Journal
Debit
Credit
Date
Dec 31
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
<
1
4
5
6
7
8
9
12
Record the sales revenue of 120 razors for $7,200 cash.
Note: Enter debits before credits,
Date
General Journal
Credit
Jan 05
Record entry
Clear entry
View general journal
Required information
Journal entry worksheet
< 1
7
6
12
8
Record the cost of goods sold for 120 razors.
Note: Enter debits before credits.
General Journal
Credit
Date
Jan 05
Record entry
Clear entry
View general Journal
Required information
Journal entry worksheet
55
6
7
8 9
10
11
12
Record the replacement of 29 razors that were returned under the warranty.
Note: Enter debits before credits
General Journal
Debit
Credit
Date
Jan 17
Record entry
Clear entry
View general journal
Required information
7
8
9
1
10
Journal entry worksheet
5
Record the adjusting entry for warranty expense for the month of January.
11 135
Note: Enter debits before credes
Date
General Journal
Debit
Credit
Jan 31
Record entry
Clear entry
View general journal
9
10
Debit
Debit
تن
Check my work
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