On October 29, 2014, Lue Co. began operations by purchasing razors for resale. L
ID: 2457477 • Letter: O
Question
On October 29, 2014, Lue Co. began operations by purchasing razors for resale. Lue uses the perpetual inventory method. The razors 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 $18 and its retail selling price is $80 in both 2014 and 2015. The manufacturer has advised the company to expect warranty costs to equal 7% of dollar sales. The following transactions and events occurred.
31 Recognized warranty expense related to December sales with an adjusting entry
Recognized warranty expense related to January sales with an adjusting entry.
What is the balance of the Estimated Warranty Liability account as at December 31, 2014? (Omit the "$" sign in your response.)
What is the balance of the Estimated Warranty Liability account as at January 31, 2015? (Omit the "$" sign in your response.)
On October 29, 2014, Lue Co. began operations by purchasing razors for resale. Lue uses the perpetual inventory method. The razors 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 $18 and its retail selling price is $80 in both 2014 and 2015. The manufacturer has advised the company to expect warranty costs to equal 7% of dollar sales. The following transactions and events occurred.
2014 Nov. 11 Sold 75 razors for $6,000 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 210 razors for $16,800 cash. 29 Replaced 30 razors that were returned under the warranty.31 Recognized warranty expense related to December sales with an adjusting entry
2015 Jan. 5 Sold 130 razors for $10,400 cash. 17 Replaced 50 razors that were returned under the warranty. 31Recognized warranty expense related to January sales with an adjusting entry.
What is the balance of the Estimated Warranty Liability account as at December 31, 2014? (Omit the "$" sign in your response.)
Estimated warranty liability balance (? ) $What is the balance of the Estimated Warranty Liability account as at January 31, 2015? (Omit the "$" sign in your response.)
Estimated warranty liability balance ( ? )$Explanation / Answer
Amount($) Decription Date Quantity Rate Sales Amount Return Balance Quantity Estimated Warranty Liability Sales 11/11/2014 75 80 6000 - 75 - Replaced Quantity 09/11/2014 15 80 1200 15 60 - Sales 16/12/2014 210 80 16800 - 270 - Replaced Quantity 29/12/2014 30 80 2400 30 240 19200 Estimated Warranty Liability 19200 Sales 05/01/2015 130 80 10400 - 370 - Replaced Quantity 17/01/2015 50 80 4000 - 320 25600 Estimated Warranty Liability 25600
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.