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 December 16 December 29 Replaced 10 razors that were returned under the warranty. Sold 150 razors for $12,000 cash. 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. oblem 11-4A (Algo) Part 5 What is the balance of the Estimated Warranty Liability account as of January 31?
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 December 16 December 29 Replaced 10 razors that were returned under the warranty. Sold 150 razors for $12,000 cash. 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. oblem 11-4A (Algo) Part 5 What is the balance of the Estimated Warranty Liability account as of January 31?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 14P: Assurance-Type Warranty Clean-All Inc. sells washing machines with a 3-year assurance-type warranty....
Related questions
Question
100%
![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 Sold 150 razors for $12,000 cash.
Recognized warranty expense related to November sales with an adjusting entry.
Replaced 10 razors that were returned under the warranty.
December 29 Replaced 20 razors that were returned under the warranty.
December 31 Recognized warranty expense related to December sales with an adjusting entry.
January 5
Sold 100 razors for $8,000 cash.
January 17
January 31
Replaced 25 razors that were returned under the warranty.
Recognized warranty expense related to January sales with an adjusting entry.
Problem 11-4A (Algo) Part 5
5. What is the balance of the Estimated Warranty Liability account as of January 31?
Estimated warranty liability balance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3f0687f5-60ba-4c2c-ac3d-204d07b8b8bb%2Fefdaf132-7579-48f7-a0d9-c8917d9a66b6%2Fy59nwpb_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
December 9
December 16 Sold 150 razors for $12,000 cash.
Recognized warranty expense related to November sales with an adjusting entry.
Replaced 10 razors that were returned under the warranty.
December 29 Replaced 20 razors that were returned under the warranty.
December 31 Recognized warranty expense related to December sales with an adjusting entry.
January 5
Sold 100 razors for $8,000 cash.
January 17
January 31
Replaced 25 razors that were returned under the warranty.
Recognized warranty expense related to January sales with an adjusting entry.
Problem 11-4A (Algo) Part 5
5. What is the balance of the Estimated Warranty Liability account as of January 31?
Estimated warranty liability balance
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning