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Allushta [10]
3 years ago
8

On October 29, 2016, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The ra

zors 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 $15 and its retail selling price is $90 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 6% of dollar sales. The following transactions and events occurred.
2016
Nov. 11 Sold 60 razors for $5,400 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 9 Replaced 12 razors that were returned under the warranty.
16 Sold 180 razors for $16,200 cash.
29 Replaced 24 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2017
Jan. 5 Sold 120 razors for $10,800 cash.
17 Replaced 29 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
Problem 11-4A Part 1
1.1 Prepare journal entries to record above transactions and adjustments for 2016.
1.2 Prepare journal entries to record above transactions and adjustments for 2017.
Problem 11-4A Part 2
2. How much warranty expense is reported for November 2016 and for December 2016?
Problem 11-4A Part 3
3. How much warranty expense is reported for January 2017?
Problem 11-4A Part 4
4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016?
Problem 11-4A Part 5
5. What is the balance of the Estimated Warranty Liability account as of January 31, 2017?
Business
1 answer:
olga_2 [115]3 years ago
6 0

Answer and Explanation:

1.1 The Journal Entry is shown below:-

a. Cash Dr, $5,400

     To Sales $5,400

(Being Sales Held is recorded)

b. Warranty Expense Dr, $330  

Estimated Warranty Liability $330

(Being warranty expense recognized is recorded)  

($5,500 × 6%)

c. Estimated Warranty Liability Dr, $435

       To Inventory $435

(Being warranty Executed is recorded)  

(29 razors × $15)

d. Cash Dr, $16,200  

       To Sales $16,200

(Being Sales Held is recorded)

e. Estimated Warranty Liability Dr, $360

        To Inventory $360

(Being Warranty Executed is recorded)

(24 × $15)

f. Warranty Expense Dr, $972

           To Estimated Warranty Liability $972

(Being warranty expense recognized is recorded)

($16,200 × 6%)

2. The computation of warranty expense is reported for November 2016 and December 2016 is shown below:-

Warranty Expense for Nov 2016 = $5,500 × 6%

= $330

Warranty Expense for Dec 2016 = $16,200 × 6%

= $972

3. The computation of warranty expense is reported for January 2017 is given below:-

Warranty Expense for Jan 2017 =$10,800 × 6%

= $648

4. The computation of balance of the Estimated Warranty Liability account as of December 31, 2016 is given below:-

Balance of Estimated Warranty Liability on 31 Dec 2016 = Estimated Warranty Liability For Nov 2016 + Estimated Warranty Liability For Dec 2016 - Warranty Claim in Dec 2016

= $330 + $972 - $648

= $654

5. The computation of balance of the Estimated Warranty Liability account as of December 31, 2017 is given below:-

Balance of Estimated Warranty Liability on 31st Jan 2017 = Balance of Estimated Warranty Liability on 31 Dec 2016 + Estimated Warranty Liability for Jan 2017 - Warranty Claim in Jan 2017

= $654 + $648 - (29 × $15)

= $654 + $648 - $435

= $867

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5 0
3 years ago
The following transactions occurred during May, the first month of operations for Hunter Products, Incorporated: Issued 50,000 s
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$247,000

Explanation:

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8 0
2 years ago
In your initial post, you are to write to either the President (on fiscal policy) or to the Chair of the Federal Reserve (on mon
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Answer:

The existing state of American economy must be declared earlier respondent the interrogation.

The U.S. financial position is vigorous in 2017.The value rate is in its perfect vary i.e., 2.4 (2-3%).Joblessness is at its ordinary proportion and there isn't an excessive amount of rise or decrease. Conversely, the value is predicted to descent to a pair of 2.1% in 2018 and 2.0 in 2019. Drop in value would cause decrease in GDP and growth in state.

To avoid this drop I will be able to inscribe to manager of Federal Reserve Bank to cut back the rate (expansionary financial policy).Federal reserve will try this by shopping for bonds. Once Federal Reserve purchases bonds the money offer increases and rate decreases. As rate decreases mixture demand and financial gain increases. With escalation in financial gain and mixture demand the value wouldn't decrease in 2018 and 2019.

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Which of the following best describes equilibrium?
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Answer:

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Explanation:

An economic equilibrium is when the agents are optimizing their decisions and opposing market forces are equal. This point allows the economic agents to maximize their utility and any change from this point will cause all agents to move away from potential maximum benefits.

In a natural equilibrium there is usually no government intervention so option A is false. Option B gives only one agent potential benefits and as such there is no equilibrium. Option D is conditional and may or may not happen as when the agents find missing information they would optimize again and move to an equilibrium.

Hope that helps.

3 0
3 years ago
The owner of a shopping mall wishes to expand the number of shops available in the food court. She has a market researcher surve
Angelina_Jolie [31]

Answer:

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<em>Hope this helps. Good luck.</em>

8 0
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