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 $14 and its retail selling price is $90. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred. Nov. 11 Sold 50 razors for $4,500 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 10 razors that were returned under the warranty. Jan. 16 Sold 150 razors for $13,500 cash. 29 Replaced 20 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. 5 Sold 100 razors for $9,000 cash. 17 Replaced 25 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry.