Question

Chapter 09 Homework Saved | 18 Required information The following information applies to the questions displayed below.] Part 1 of 5 points On October 29, 2017, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The razors have a 90-day warranty that requires the company to replace any nonworking razor. 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 $15 and its retail selling price is $80 in both 2017 and 2018. The manufacturer has advised the company to expect warranty costs to equal 6% of dollar sales. The following transactions and events occurred. oBook 2017 Nov. 11 Sold 60 razors for $4,800 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 12 razors that were returned under the warranty. 16 Sold 188 razors for $14,400 cash. 29 Replaced 24 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Print References 2018 Jan. 5 Sold 120 razors for $9,600 cash. 17 Replaced 29 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. 1a. Prepare journal entries to record above transactions and adjustments for 2017 1b. Prepare journal entries to record above transactions and adjustments for 2018. Complete this question by entering your answers in the tabs below. Required 1A Required 1B Prepare journal entries to record above transactions and adjustments for 2017. View transaction list Journal entry worksheet 2 3 4 5 6 7 8 Record the sales revenue of 60 razors for $4,800 cash. Note: Enter debits before credits. General Journal Debit Credit Date Nov 11 Record entry Clear entry View general journal

Answer 1

1.1
Date	General Journal	Debit	Credit
11-Nov	Cash	4,800
	Sales		4,800
11-Nov	Cost of goods sold	900		=60*15
	Merchandise inventory		900
30-Nov	Warranty expense	288		=4800*6%
	Estimated warranty liability		288
9-Dec	Estimated warranty liability	180		=12*15
	Merchandise inventory		180
16-Dec	Cash	14,400
	Sales		14,400
16-Dec	Cost of goods sold	2,700		=180*15
	Merchandise inventory		2,700
29-Dec	Estimated warranty liability	360		=24*15
	Merchandise inventory		360
31-Dec	Warranty expense	864		=14400*6%
	Estimated warranty liability		864
1.2
Date	General Journal	Debit	Credit
5-Jan	Cash	9,600
	Sales		9,600
5-Jan	Cost of goods sold	1,800		=120*15
	Merchandise inventory		1,800
17-Jan	Estimated warranty liability	435		=29*15
	Merchandise inventory		435
31-Jan	Warranty expense	576		=9600*6%
	Estimated warranty liability		576
2
	Warranty expense for November 2017	288		=4800*6%
	Warranty expense for December 2017	864		=14400*6%
3	Warranty expense	576		=9600*6%
4
	Warranty expense for November 2017	288
	Warranty expense for December 2017	864
	Less: Cost of replacements	-540		=(12+24)*15
	Estimated Warranty Liability balance	612
5	Estimated Warranty Liability balance, beginning	612
	Warranty expense for January 2018	576
	Less: Cost of replacements	-435		=29*15
	Estimated Warranty Liability balance	753