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question the following information applies to the questions displayed below on octob 4282581

Question

[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 $80 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.

 

 

 

 

1a. Prepare journal entries to record these transactions and adjustments for 2014.

1b. Prepare journal entries to record these transactions and adjustments for 2015.

2. How much warranty expense is reported for November 2014 and for December 2014?

3. How much warranty expense is reported for January 2015?

4. What is the balance of the Estimated Warranty Liability account as of December 31, 2014?

5. What is the balance of the Estimated Warranty Liability account as of January 31, 2015?

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 $80 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.

 

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