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Prepare journal entries to record above transactions

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Question - On October 29, Lobo Company 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 $16 and its retail selling price is $70. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred.

November 11 Sold 70 razors for $4,900 cash.

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

December 9 Replaced 14 razors that were returned under the warranty.

December 16 Sold 210 razors for $14,700 cash.

December 29 Replaced 28 razors that were returned under the warranty.

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

January 5 Sold 140 razors for $9, 800 cash.

January 17 Replaced 33 razors that were returned under the warranty.

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

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

Reference no: EM133178004

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