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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 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.

Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter9: Working Capital
Section: Chapter Questions
Problem 33E
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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.
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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