1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Svetach [21]
3 years ago
7

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 $20 and its retail selling price is $75 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 8% of dollar sales. The following transactions and events occurred.
2016
Nov. 11 Sold 105 razors for $7,875 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 9 Replaced 15 razors that were returned under the warranty.
16 Sold 220 razors for $16,500 cash.
29 Replaced 30 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2017
Jan. 5 Sold 150 razors for $11,250 cash.
17 Replaced 50 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
1.1 Prepare journal entries to record above transactions and adjustments for 2016.
2. How much warranty expense is reported for November 2016 and for December 2016?
Warranty Expense for November 2016 ?????
Warranty expense for December 2016 ?????
3. How much warranty expense is reported for January 2017?
4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016?
5. What is the balance of the Estimated Warranty Liability account as of January 31, 2017?
Business
1 answer:
EleoNora [17]3 years ago
7 0

Answer:

Nov 11

Dr Cash 7,875

Cr To Sale 7,875

Nov. 11

Dr Cost of Goods Sold 2,100

Cr To Inventory 2,100

Nov. 30

Dr Warranty Expenses 630

Cr To Warranty Liability 630

Dec. 9

Dr Warranty Liability 300

Cr To Inventory 300

Dec. 16

Dr Cash 16,500

Cr To Sales 16,500

Dec. 16

Dr Cost of Goods Sold 4,400

Cr To Inventory 4,400

Dec. 29

Dr Warranty Liability 600

Cr To Inventory 600

Dec. 31

Dr Warranty Expenses 1,320

Cr To Warranty Liability 1,320

1.b Journal Entries for 2017

Jan 5

Dr Cash 11,250

Cr To Sales 11,250

Jan 5

Dr Cost of goods sold 3,000

Cr To Inventory 3,000

Jan 17

Dr Warranty Liability 1,000

Cr To Inventory 1,000

Jan 31

Dr Warranty Expenses 900

Cr To Warranty Liability 900

2)a. Warranty Expenses= $630

2b. Warranty Expenses= $1,320

3). Warranty Expenses= $900

4). Estimated Warranty Liability Account $1,050

5). Estimated Warranty liability account $900

Explanation:

Preparation of the Journal entries for Lobo Co

Journal Entries for 2016 for Lobo Co

Nov 11

Dr Cash 7,875

Cr To Sale 7,875

Nov. 11

Dr Cost of Goods Sold 2,100

Cr To Inventory (20*$105) 2,100

Nov. 30

Dr Warranty Expenses 630

($7,875*8%)

Cr To Warranty Liability 630

Dec. 9

Dr Warranty Liability 300

(15*$20)

Cr To Inventory 300

Dec. 16

Dr Cash 16,500

Cr To Sales 16,500

Dec. 16

Dr Cost of Goods Sold 4,400

Cr To Inventory 4,400

(220 * $20)

Dec. 29

Dr Warranty Liability 600

(30*$20)

Cr To Inventory 600

Dec. 31

Dr Warranty Expenses 1,320

($16,500*8%)

Cr To Warranty Liability 1,320

1.b Journal Entries for 2017

Jan 5

Dr Cash 11,250

Cr To Sales 11,250

Jan 5

Dr Cost of goods sold 3,000

(150*$15)

Cr To Inventory 3,000

Jan 17

Dr Warranty Liability 1,000

(50*$20)

Cr To Inventory 1,000

Jan 31

Dr Warranty Expenses 900

(11,250*8%)

Cr To Warranty Liability 900

2)a. Warranty Expenses for Nov. 2016

Warranty Expenses= $7,875*8%

Warranty Expenses= $630

2b. Warranty Expenses for Dec. 2016

Warranty Expenses= $16500*8%

Warranty Expenses= $1,320

3). Warranty Expenses for Jan. 2017

Warranty Expenses= $11,250*8%

Warranty Expenses= $900

4). Estimated Warranty Liability Account as on Dec. 31, 2016

Estimated Warranty Liability Account= $630 + $1,320 - $300 - $600

Estimated Warranty Liability Account= $1950- $900

Estimated Warranty Liability Account= $1,050

5). Estimated Warranty liability account as on Jan. 31, 2017

Estimated Warranty liability account = $1,050 + $900 - $1,050

Estimated Warranty liability account= $900

You might be interested in
Bert's Car Sales is a new firm that is still in a period of rapid growth. The company plans on retaining all of its earnings for
DaniilM [7]

Answer:

The correct choice is C)

The most logical thing to do would be to calculate the value of the stock in 5 years time.

Explanation:

This speaks to ones understanding of dividend growth stock valuation models. These tools are used to establish a fair value for a stock by discounting the present value of its future dividends. A commonly used model is the constant growth dividend discount model.

The formula for the DDM, which assumes constant growth in dividends, is provided below.

P0 = D1/(r-g)

Where,

P0 = intrinsic value of stock

D1 = dividend payment one year from today

r = discount rate

g = growth rate

Identifying the correct answer entails establishing a timeline of the expected cash flows. We are given the following information:

t0 = $0

t1 = $0

t2 = $0

t3 = $0

t4 = $0

t5 = $0.20

t6 = $0.20 * 1.035

Given a rate of return, we could use the constant growth dividend discount model to establish the fair value of the firm at t5 (five years from today). Incidentally, to determine today's value, we'd discount it back another five years.

Based on the information above,  we are able to prove that the answer is '5'.

Cheers!

3 0
3 years ago
Identifying and Analyzing Financial Statement Effects of Cash Dividends Freid Corp. has outstanding 6,000 shares of $50 par valu
Neporo4naja [7]

Answer:

Assets              =                Liabilities          +               Equity

cash (18,000)                       NA                          Retained earnigns (18,000)

cash (88,000)                      NA                          Retained earnigns (88,000)

Retained earnings is an equity account and any cash dividends paid either to preferred or common stock will decrease cash and retained earnings, remember that both sides must balance.

6 0
2 years ago
What does the size of the dividend per share of stock depend on?
defon

Answer:

The size of the dividend per share of stock depends on: The corporation's profit

Dividend per share is calculated by: Total dividend / Total shares outstanding,

Which means that dividend per share will increase if the total dividend increases.

Meanwhile, the total dividend will be increased if the company gains more profit

4 0
3 years ago
Read 2 more answers
What does pito mean kids said i look like a pito
Drupady [299]
In Spanish or in what


Cause if it’s in Spanish you don’t wanna know
7 0
2 years ago
Read 2 more answers
The required return on the stock of Moe's Pizza is 10.8 percent and aftertax required return on the company's debt is 3.40 perce
garik1379 [7]

Answer:

The required return for the new project is 6.87%

Explanation:

In order to calculate the required return for the new project we would have to calculate the Weighted Average Cost of Capital (WACC) adjusted by risk adjustment factor .

The Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]

After -tax Cost of Debt = 3.40%

Cost of Equity = 10.80%

Weight of Debt = 0.39

Weight of Equity = 0.69

Therefore, the Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]

= [3.40% x 0.39] + [10.80% x 0.69]

= 1.32% + 7.45%

= 8.77%

The required return for the new project = Weighted Average Cost of Capital – Risk Adjustment Factor

= 8.77% - 1.90%

= 6.87%

The required return for the new project is 6.87%

8 0
3 years ago
Other questions:
  • Adkins Appliances buys 10,000 shares of stock in Charlie Company for $10 per share on January 2 of the current year. Adkins owns
    9·1 answer
  • Modern iq tests have a mean of ____ and a standard deviation of ____.​
    15·1 answer
  • What is important to know about yourself when making a career choice?
    10·1 answer
  • One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover
    8·1 answer
  • This is a debt that will be subtracted from the balance of your account
    11·1 answer
  • -Ricky Ripov’s Pawn Shop charges an interest rate of 15.25 percent per month on loans to its customers. Like all lenders, Ricky
    6·1 answer
  • A____helps a society provide for the wants and needs of Its people.
    14·1 answer
  • Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate accepts. If a dispute
    14·1 answer
  • All of the following pairs of goods are substitutes except A. we observe the price of automobiles decreases and the demand for p
    7·1 answer
  • A situation in which both unemployment and inflation rates are high is known as ______.
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!