Required informationSkip to question [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 $15 and its retail selling price is $80. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred.Nov. 11 Sold 80 razors for $6,400 cash. 30 Recognized warranty expense related to November sales with an adjusting entry.Dec. 9 Replaced 16 razors that were returned under the warranty. 16 Sold 240 razors for $19,200 cash. 29 Replaced 32 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry.Jan. 5 Sold 160 razors for $12,800 cash. 17 Replaced 37 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. 1. Prepare journal entries to record above transactions and adjustments. !Required informationDec 16Cost of goods soldMerchandise inventory7Dec 29Estimated warranty liabilityMerchandise inventoryDec 31Warranty expenseEstimated warranty liability9.Jan 05CashSales10Jan 05Cost of goods soldMerchandise inventory11Jan 17Estimated warranty liabilityMerchandise inventory12Jan 31Warranty expenseEstimated warranty liability !Required information1Nov 11Cash6,400Sales6,4002Nov 11Cost of goods soldMerchandise inventory3Nov 30Warranty expenseEstimated warranty liability4Dec 09Estimated warranty liabilityMerchandise inventoryDec 16CashSalesDec 16Cost of goods soldMerchandise inventory7Dec 29Estimated warranty liabilityMerchandise inventory8Dec 31Warranty expenseEstimated warranty liability9Jan 05Cash

Journal entries are reported in the books so as to ensure the reporting of transactions occurring in…

Answered: On October 29, Lobo Co. began…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 17MCQ: ( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory...

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[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 $15 and its retail selling price is $80. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred.

Nov.	11	Sold 80 razors for $6,400 cash.
	30	Recognized warranty expense related to November sales with an adjusting entry.
Dec.	9	Replaced 16 razors that were returned under the warranty.
	16	Sold 240 razors for $19,200 cash.
	29	Replaced 32 razors that were returned under the warranty.
	31	Recognized warranty expense related to December sales with an adjusting entry.
Jan.	5	Sold 160 razors for $12,800 cash.
	17	Replaced 37 razors that were returned under the warranty.
	31	Recognized warranty expense related to January sales with an adjusting entry.

1. Prepare journal entries to record above transactions and adjustments.

!
Required information
Dec 16
Cost of goods sold
Merchandise inventory
7
Dec 29
Estimated warranty liability
Merchandise inventory
Dec 31
Warranty expense
Estimated warranty liability
9.
Jan 05
Cash
Sales
10
Jan 05
Cost of goods sold
Merchandise inventory
11
Jan 17
Estimated warranty liability
Merchandise inventory
12
Jan 31
Warranty expense
Estimated warranty liability

!
Required information
1
Nov 11
Cash
6,400
Sales
6,400
2
Nov 11
Cost of goods sold
Merchandise inventory
3
Nov 30
Warranty expense
Estimated warranty liability
4
Dec 09
Estimated warranty liability
Merchandise inventory
Dec 16
Cash
Sales
Dec 16
Cost of goods sold
Merchandise inventory
7
Dec 29
Estimated warranty liability
Merchandise inventory
8
Dec 31
Warranty expense
Estimated warranty liability
9
Jan 05
Cash

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