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 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 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 $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 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 1 Required: 1. Prepare journal entries to record above transactions and adjustments.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.5AP
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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 $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
January 17
January 31
Problem 11-4A (Algo) Part 1
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.
Required:
1. Prepare journal entries to record above transactions and adjustments.
Replaced 25 razors that were returned under the warranty.
Recognized warranty expense related to January sales with an adjusting entry.
View transaction list
<
Journal entry worksheet
1
Date
November 11
2 3 4
Note: Enter debits before credits.
5
Record the sales revenue of 50 razors for $4,000 cash.
Record entry
General Journal
6
Clear entry
7
8
Debit
12
Credit
View general journal
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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 $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
January 17
January 31
Problem 11-4A (Algo) Part 1
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.
Required:
1. Prepare journal entries to record above transactions and adjustments.
Replaced 25 razors that were returned under the warranty.
Recognized warranty expense related to January sales with an adjusting entry.
View transaction list
<
Journal entry worksheet
1
Date
November 11
2 3 4
Note: Enter debits before credits.
5
Record the sales revenue of 50 razors for $4,000 cash.
Record entry
General Journal
6
Clear entry
7
8
Debit
12
Credit
View general journal
>
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