Problem 11-4A (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. T company's cost per new razor is $14 and its retail selling price is $80. The company expects warranty costs to equal 8% dollar sales. The following transactions occurred. November 11 Sold 50 razors for $4,000 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 10 razors that were returned under the warranty. December 16 Sold 150 razors for $12,000 cash. December 29 Replaced 20 razors that were returned under the warranty. December 31 Recognized warranty expense related to December sales with an adjusting entry. January 5 Sold 100 razors for $8,000 cash. January 17 Replaced 25 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A (Algo) Part 2 2. How much warranty expense is reported for November and for December? Warranty expense for November Warranty expense for December
Problem 11-4A (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. T company's cost per new razor is $14 and its retail selling price is $80. The company expects warranty costs to equal 8% dollar sales. The following transactions occurred. November 11 Sold 50 razors for $4,000 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 10 razors that were returned under the warranty. December 16 Sold 150 razors for $12,000 cash. December 29 Replaced 20 razors that were returned under the warranty. December 31 Recognized warranty expense related to December sales with an adjusting entry. January 5 Sold 100 razors for $8,000 cash. January 17 Replaced 25 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A (Algo) Part 2 2. How much warranty expense is reported for November and for December? Warranty expense for November Warranty expense for December
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Required Information**
**Problem 11-4A (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 $14 and its retail selling price is $80. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred:
- November 11: Sold 50 razors for $4,000 cash.
- November 30: Recognized warranty expense related to November sales with an adjusting entry.
- December 9: Replaced 10 razors that were returned under the warranty.
- December 16: Sold 150 razors for $12,000 cash.
- December 29: Replaced 20 razors that were returned under the warranty.
- December 31: Recognized warranty expense related to December sales with an adjusting entry.
- January 5: Sold 100 razors for $8,000 cash.
- January 17: Replaced 25 razors that were returned under the warranty.
- January 31: Recognized warranty expense related to January sales with an adjusting entry.
**Problem 11-4A (Algo) Part 2**
2. How much warranty expense is reported for November and for December?
| Warranty expense for November | ___________ |
| Warranty expense for December | ___________ |](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f0687f5-60ba-4c2c-ac3d-204d07b8b8bb%2Faceba25a-d05a-4d14-ac30-36802061e973%2F1wxv5ij_processed.png&w=3840&q=75)
Transcribed Image Text:**Required Information**
**Problem 11-4A (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 $14 and its retail selling price is $80. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred:
- November 11: Sold 50 razors for $4,000 cash.
- November 30: Recognized warranty expense related to November sales with an adjusting entry.
- December 9: Replaced 10 razors that were returned under the warranty.
- December 16: Sold 150 razors for $12,000 cash.
- December 29: Replaced 20 razors that were returned under the warranty.
- December 31: Recognized warranty expense related to December sales with an adjusting entry.
- January 5: Sold 100 razors for $8,000 cash.
- January 17: Replaced 25 razors that were returned under the warranty.
- January 31: Recognized warranty expense related to January sales with an adjusting entry.
**Problem 11-4A (Algo) Part 2**
2. How much warranty expense is reported for November and for December?
| Warranty expense for November | ___________ |
| Warranty expense for December | ___________ |
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