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 December 9 December 16 December 29 December 31 January 5 January 17 January 31 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. 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. Replaced 25 razors that were returned under the warranty. Recognized warranty expense related to January sales with an adjusting entry. roblem 11-4A (Algo) Part 4 What is the balance of the Estimated Warranty Liability account as of December 31? stimated warranty liability balance
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 December 9 December 16 December 29 December 31 January 5 January 17 January 31 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. 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. Replaced 25 razors that were returned under the warranty. Recognized warranty expense related to January sales with an adjusting entry. roblem 11-4A (Algo) Part 4 What is the balance of the Estimated Warranty Liability account as of December 31? stimated warranty liability balance
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter9: Working Capital
Section: Chapter Questions
Problem 33E
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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.
Replaced 10 razors that were returned under the warranty.
December 9
December 16
December 29
Sold 150 razors for $12,000 cash.
Replaced 20 razors that were returned under the war ity.
December 31
January 5
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 4
4. What is the balance of the Estimated Warranty Liability account as of December 31?
Estimated warranty liability balance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f0687f5-60ba-4c2c-ac3d-204d07b8b8bb%2Fc7664fcf-6fa7-40d5-bc9d-fb54c5729baa%2Freldb6c_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.
Replaced 10 razors that were returned under the warranty.
December 9
December 16
December 29
Sold 150 razors for $12,000 cash.
Replaced 20 razors that were returned under the war ity.
December 31
January 5
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 4
4. What is the balance of the Estimated Warranty Liability account as of December 31?
Estimated warranty liability balance
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