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Make journal entries to record transactions and adjustments

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Reference no: EM132732387

Question - On October 29, Lobo Co. 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 $20 and its retail selling price is $75. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred.

Nov. 11 Sold 105 razors for $7,875 cash.

Nov. 30 Recognized warranty expense related to November sales with an adjusting entry.

Dec. 9 Replaced 15 razors that were returned under the warranty.

Dec. 16 Sold 220 razors for $16,500 cash.

Dec. 29 Replaced 30 razors that were returned under the warranty.

Dec. 31 Recognized warranty expense related to December sales with an adjusting entry.

Jan. 5 Sold 150 razors for $11,250 cash.

Jan. 17 Replaced 50 razors that were returned under the warranty.

Jan. 31 Recognized warranty expense related to January sales with an adjusting entry.

Required - Make journal entries to record above transactions and adjustments.

Reference no: EM132732387

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