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 $15 and its retall selling price is $80. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred.
November 11 Sold 60 razors for $4,800 cash.
November 30 Recognized warranty expense related to November sales with an adjusting entry.
December 9 December 16 December 29
Replaced 12 razors that were returned under the warranty. Sold 180 razors for $14,400 cash.
Replaced 24 razors that were returned under the warranty.
December 31 Recognized warranty expense related to December sales with an adjusting entry.
January 5 Sold 120 razors for $9,600 cash.
January 17 Replaced 29 razors that were returned under the warranty.
January 31 Recognized warranty expense related to January sales with an adjusting entry.
How much warranty expense is reported for January?
What Is the balance of the Estimated Warranty Liability account as of December 31 ? What Is the balance of the Estimated Warranty Liability account as of January 31 ?