Prepare journal entries and record these transactions and adjustments for 2014:
ID: 2474530 • Letter: P
Question
Prepare journal entries and record these transactions and adjustments for 2014: The following information applies to the questions displayed below On October 29, 2014, 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 $14 and its retail selling price is $70 in both 2014 and 2015. The manufacturer has advised the company to expect warranty costs to equal 6% of dollar sales. The following transactions and events occurred. 2014 11 Sold 60 razors for $4,200 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. 9 Replaced 12 razors that were returned under the warranty. 16 Sold 180 razors for $12,600 cash. 29 Replaced 24 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry. Nov. Dec. 2015 5 Sold 120 razors for $8,400 cash. 17 Replaced 29 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. Jan.Explanation / Answer
* Note more than 4 question can be answered at go
Nov 11 Cost of goods sold 840.00 Merchandise inventory 840.00 Nov 30 Warranty Expenses 50.40 Estimated warranty liability 50.40 (6% of Cost of goods sold) Dec 09 Estimated warranty liability 168.00 Merchandise inventory 168.00 Dec 16 Cost of goods sold 2,520.00 Merchandise inventory 2,520.00 Dec 29 Estimated warranty liability 336.00 Merchandise inventory 336.00 Dec 31 Warranty Expenses 151.20 Estimated warranty liability 151.20 (6% of Cost of goods sold)