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 $13 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 80 razors for $6,400 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 16 razors that were returned under the warranty. December 16 Sold 240 razors for $19,200 cash. December 29 Replaced 32 razors that were returned under the warranty. December 31 Recognized warranty expense related to December sales with an adjusting entry. January 5 Sold 160 razors for $12,800 cash. January 17 January 31 Replaced 37 razors that were returned under the warranty. Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A (Algo) Part 1 Required: 1. Prepare journal entries to record above transactions and adjustments.
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 $13 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 80 razors for $6,400 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 16 razors that were returned under the warranty. December 16 Sold 240 razors for $19,200 cash. December 29 Replaced 32 razors that were returned under the warranty. December 31 Recognized warranty expense related to December sales with an adjusting entry. January 5 Sold 160 razors for $12,800 cash. January 17 January 31 Replaced 37 razors that were returned under the warranty. Recognized warranty expense related to January sales with an adjusting entry. Problem 11-4A (Algo) Part 1 Required: 1. Prepare journal entries to record above transactions and adjustments.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 $13 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 80 razors for $6,400 cash.
November 30 Recognized warranty expense related to November sales with an adjusting entry.
December 9
Replaced 16 razors that were returned under the warranty.
December 16
Sold 240 razors for $19,200 cash.
December 29 Replaced 32 razors that were returned under the warranty.
December 31
Recognized warranty expense related to December sales with an adjusting entry.
January 5
Sold 160 razors for $12,800 cash.
January 17
Replaced 37 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 1
Required:
1. Prepare journal entries to record above transactions and adjustments.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffbbae46a-0c86-4513-bd7e-12ce94de7ded%2Ff6265893-7bb8-4e08-9fab-4b950c1060f3%2Fcrbgcm_processed.png&w=3840&q=75)
Transcribed Image Text: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 $13 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 80 razors for $6,400 cash.
November 30 Recognized warranty expense related to November sales with an adjusting entry.
December 9
Replaced 16 razors that were returned under the warranty.
December 16
Sold 240 razors for $19,200 cash.
December 29 Replaced 32 razors that were returned under the warranty.
December 31
Recognized warranty expense related to December sales with an adjusting entry.
January 5
Sold 160 razors for $12,800 cash.
January 17
Replaced 37 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 1
Required:
1. Prepare journal entries to record above transactions and adjustments.
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