Requir 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. Replaced 10 razors that were returned under the warranty. Sold 150 razors for $12,000 cash. December 9 December 16 December 29 Replaced 20 razors that were returned under the warranty. December 31 January 5 January 17 Replaced 25 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Recognized warranty expense related to December sales with an adjusting entry. Sold 100 razors for $8,000 cash. -oblem 11-4A (Algo) Part 3 How much warranty expense is reported for January? arranty expense
Requir 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. Replaced 10 razors that were returned under the warranty. Sold 150 razors for $12,000 cash. December 9 December 16 December 29 Replaced 20 razors that were returned under the warranty. December 31 January 5 January 17 Replaced 25 razors that were returned under the warranty. January 31 Recognized warranty expense related to January sales with an adjusting entry. Recognized warranty expense related to December sales with an adjusting entry. Sold 100 razors for $8,000 cash. -oblem 11-4A (Algo) Part 3 How much warranty expense is reported for January? arranty expense
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.
Sold 150 razors for $12,000 cash.
December 16
December 29
December 31
January 5
Replaced 20 razors that were returned under the warranty.
Recognized warranty expense related to December sales with an adjusting entry.
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 3
3. How much warranty expense is reported for January?
Warranty expense](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f0687f5-60ba-4c2c-ac3d-204d07b8b8bb%2Fef7ec9ac-ebf9-4779-b29f-6f01b135cf83%2Ffbfbjon_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.
Sold 150 razors for $12,000 cash.
December 16
December 29
December 31
January 5
Replaced 20 razors that were returned under the warranty.
Recognized warranty expense related to December sales with an adjusting entry.
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 3
3. How much warranty expense is reported for January?
Warranty expense
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