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telo118 [61]
3 years ago
11

On October 29, 2017, 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 $14 and its retail selling price is $70 in both 2017 and 2018. The manufacturer has advised the company to expect warranty costs to equal 6% of dollar sales.
The following transactions and events occurred:
2017
Nov. 11 Sold 70 razors for $4,900 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 9 Replaced 14 razors that were returned under the warranty.
16 Sold 210 razors for $14,700 cash.
29 Replaced 28 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2018
Jan. 5 Sold 140 razors for $9,800 cash.
17 Replaced 33 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
a. Prepare journal entries to record above transactions and adjustments for 2017.
b. Prepare journal entries to record above transactions and adjustments for 2018.
Business
1 answer:
sveta [45]3 years ago
5 0

Answer:

a. Nov 11, 2017

Dr Cash $4,900

Cr sales $4,900

Nov 30, 2017

Dr Warranty expense $294

Cr Estimated warranty Liabilities $294

Dec 9, 2017

Dr Estimated warranty Liabilities $196

Cr Cash $196

Dec 16, 2017

Dr Cash $14,700

Cr sales $14,700

Dec 29, 2017

Dr Estimated warranty Liabilities $392

Cr Cash $392

Dec 31, 2017

Dr Warranty expense $882

Cr Estimated warranty Liabilities $882

b. Jan 5,2018

Dr Cash $9,800

Cr Sales$9,800

Jan 17,2018

Dr Estimated warranty Liabilities $462

Cr Cash $462

Dec 31,2018

Dr Warranty expense $588

Cr Cash $588

Explanation:

a. Preparation of the journal entries to record above transactions and adjustments for 2017

Nov 11, 2017

Dr Cash $4,900

Cr sales $4,900

(Being to record razors sold for cash)

Nov 30, 2017

Dr Warranty expense $294

Cr Estimated warranty Liabilities $294

($4900*6%)

(Being to record warranty expense)

Dec 9, 2017

Dr Estimated warranty Liabilities $196

Cr Cash $196

(14 razors*14)

(Being to replaced 14 razors)

Dec 16, 2017

Dr Cash $14,700

Cr sales $14,700

(Being razors sold for cash)

Dec 29, 2017

Dr Estimated warranty Liabilities $392

Cr Cash $392

(28 razors*14)

(Being to replaced 28 razors)

Dec 31, 2017

Dr Warranty expense $882

Cr Estimated warranty Liabilities $882

($14,700*6%)

(Being to record warranty expense)

b. Preparation of the journal entries to record above transactions and adjustments for 2018

Jan 5,2018

Dr Cash $9,800

Cr Sales$9,800

(Being to record razors sold for cash)

Jan 17,2018

Dr Estimated warranty Liabilities $462

Cr Cash $462

(33 razors*14)

(Being to replaced 33 razors)

Dec 31,2018

Dr Warranty expense $588

Cr Cash

(6%*$9,800) $588

(Being to record warranty expense)

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Answer:

B. make it unequivocally clear that the company's core values and ethical standards are strictly enforced cultural norms.

Explanation:

Once values and ethical standards have been formally adopted, a company must make it unequivocally clear that the company's core values and ethical standards are strictly enforced cultural norms.

This ultimately implies that, when an organization has developed its policy which normally connotes its values and ethical standards, it is very important and essential that it communicates succinctly to its employees they must abide by this policy and must be strongly adopted and adhered to by them.

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Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $344,000 and credit sa
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Answer:

c. Bad Debt Expense 14,600 Allowance for Doubtful Accounts 14,600.

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2 years ago
Samsonite has declared a 90% stock dividend. At the time of the declaration, Samsonite's stock was selling for $250 per share. I
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$131.58

Explanation:

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Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is drive
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Answer:

A. Variable cost per unit 0.075 per kilometer

Fixed cost $7,998

B. Y= 0.075 + 7,998X

Explanation:

A. Calculation to estimate the variable and fixed cost elements of the annual cost of the truck operation.

First step is to calculate the operating cost if the Truck is driven 129,000 kilometers during a year in which the average operating cost is 13.7 cents per kilometer

​Operating cost= 129,000 x 13.7/100

​Operating cost= $17,673

Second step is to calculate the operating cost if Truck is driven only 86,000 kilometers during a year in which the average operating cost increases to 16.8 cents per kilometer.

Operating cost = 86,000 x 16.8/100

Operating cost =$14,448

Calculation for VARIABLE COST PER UNIT using this formula

Variable cost per unit = (Highest activity cost - Lowest activity cost)/(Highest activity - Lowest activity)

Let plug in the formula

Variable cost per unit= $17,673-$14,448)/(129,000-86,000)

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Variable cost per unit= 0.075 per kilometer

Calculation for FIXED COST using this formula

Fixed cost = Highest activity cost - Highest activity x Variable cost per kilometer

Let plug in the formula

Fixed cost= $17,673 - 129,000 x 0.075

Fixed cost= $17,673 -$9,675

Fixed cost=$7,998

Therefore the variable is 0.075 per kilometer and fixed cost elements of the annual cost of the truck operation is $7,998

B. Expression of the variable and fixed costs in the form Y = a + bX.

Y = a + bX

Y= 0.075 + 7,998X

Therefore the variable and fixed costs in the form Y = a + bX will be Y= 0.075 + 7,998X

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I do believe its B)have to follow a set schedule.

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