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 $14 and its retail selling price is $80. The company expects warranty costs to equal 5% of dollar sales. The following transactions occurred. November 11 Sold 70 razors for $5,600 cash. November 30 December 9 December 16 December 29 December 31 January 5 January 17 January 31 Recognized warranty expense related to November sales with an adjusting entry. Replaced 14 razors that were returned under the warranty. Sold 210 razors for $16,800 cash. Replaced 28 razors that were returned under the warranty. Recognized warranty expense related to December sales with an adjusting entry. Sold 140 razors for $11,200 cash. Replaced 33 razors that were returned under the warranty. Recognized warranty expense related to January sales with an adjusting entry. Required: 1. Prepare journal entries to record above transactions and adjustments. View transaction list Journal entry worksheet 5 6 7 Record the sales revenue of 70 razors for $5.600 cash. - 12 Date November 11 General Journal Debit Credit 5.600 6.600 D
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 $14 and its retail selling price is $80. The company expects warranty costs to equal 5% of dollar sales. The following transactions occurred. November 11 Sold 70 razors for $5,600 cash. November 30 December 9 December 16 December 29 December 31 January 5 January 17 January 31 Recognized warranty expense related to November sales with an adjusting entry. Replaced 14 razors that were returned under the warranty. Sold 210 razors for $16,800 cash. Replaced 28 razors that were returned under the warranty. Recognized warranty expense related to December sales with an adjusting entry. Sold 140 razors for $11,200 cash. Replaced 33 razors that were returned under the warranty. Recognized warranty expense related to January sales with an adjusting entry. Required: 1. Prepare journal entries to record above transactions and adjustments. View transaction list Journal entry worksheet 5 6 7 Record the sales revenue of 70 razors for $5.600 cash. - 12 Date November 11 General Journal Debit Credit 5.600 6.600 D
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text: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 $14 and its retail selling price is $80. The company expects warranty costs to equal 5% of
dollar sales. The following transactions occurred.
November 11 Sold 70 razors for $5,600 cash.
November 30
December 9
December 16
December 29
December 31
January 5
January 17
January 31
Recognized warranty expense related to November sales with an adjusting entry.
Replaced 14 razors that were returned under the warranty.
Sold 210 razors for $16,800 cash.
Replaced 28 razors that were returned under the warranty.
Recognized warranty expense related to December sales with an adjusting entry.
Sold 140 razors for $11,200 cash.
Replaced 33 razors that were returned under the warranty.
Recognized warranty expense related to January sales with an adjusting entry.
Required:
1. Prepare journal entries to record above transactions and adjustments.
View transaction list
Journal entry worksheet
5 6
7
Record the sales revenue of 70 razors for $5.600 cash.
-
12
Date
November 11
General Journal
Debit
Credit
5.600
6.600
D
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