Chapter 11 Accounting Problems Saves Help Save & Exit Submit Check my work 5 Part 1 of 4 9 points Required information Problem 11-4A 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 $20 and its retail selling price is $75. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred. Nov. 11 Sold 105 razors for $7,875 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 15 razors that were returned under the warranty. 16 Sold 220 razors for $16,562 cash. 29 Replaced 30 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. 5 Sold 150 razors for $11,250 cash. 17 Replaced se razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. eBook Ask Print References Problem 11-4A Part 1 1. Prepare joumal entries to record above transactions and adjustments. No General Journal Debit Date Nov 11 Credit 1 Cash Sales 2 Nov 11 Cost of goods sold Merchandise inventory 3 Nov 30 Warranty expense Estimated warranty liability 4 Dec 09 Estimated warranty liability Merchandise inventory 5 Dec 16 Cash Sales 6 Dec 16 Cost of goods sold Merchandise inventory 7 Dec 20 Estimated warranty liability Merchandise inventory 8 Dec 31 Warranty expense Estimated warranty liability 9 Jan 05 Cash Sales 10 Jan 05 Cost of goods sold Merchandise inventory MC 8 Required information Problem 11-4A 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 $20 and its retail selling price is $75. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred. Nov. 11 Sold 105 razors for $7,875 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 15 razors that were returned under the warranty. 16 Sold 22e razors for $16,500 cash. 29 Replaced 30 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. 5 Sold 150 razors for $11,250 cash. 17 Replaced se razors that were returned under the warranty. 31 Recognized warranty expense elated to January sales with an adjusting entry. Problem 11-4A Part 1 1. Prepare journal entries to record above transactions and adjustments. VICEVIC 3 Nov 30 Warranty expense Estimated warranty liability 4 Dec 09 Estimated warranty liability Merchandise inventory 5 Dec 18 Cash Sales 8 6 Dec 16 Cost of goods sold Merchandise inventory 7 Dec 29 Estimated warranty liability Merchandise inventory 8 Dec 31 Warranty expense Estimated warranty liability . 9 Jan 05 Cash Sales 10 Jan 05 Cost of goods sold Merchandise inventory 11 Jan 17 Estimated warranty liability Merchandise inventory 12 Jan 31 Warranty expense Estimated warranty liability