PLEASE DO ALL 5 PARTS!!!
Required information
Problem 11-4A Warranty expense and liability estimation LO P4
[The following information applies to the questions displayed below.]
On October 29, 2016, Lobo Co. began operations by purchasing razors for resale. Lobo 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 $15 and its retail selling price is $90 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 6% of dollar sales. The following transactions and events occurred.
2016
Nov. 11 Sold 60 razors for $5,400 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 12 razors that were returned under the warranty. 16 Sold 180 razors for $16,200 cash. 29 Replaced 24 razors that were returned under the warranty. 31 Recognized warranty expense related to December sales with an adjusting entry.
2017
Jan. 5 Sold 120 razors for $10,800 cash. 17 Replaced 29 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry.
Problem 11-4A Part 1
1.1 Prepare journal entries to record above transactions and adjustments for 2016.
1.2 Prepare journal entries to record above transactions and adjustments for 2017.
Problem 11-4A Part 2
2. How much warranty expense is reported for November 2016 and for December 2016?
Problem 11-4A Part 3
3. How much warranty expense is reported for January 2017?
Problem 11-4A Part 4
4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016?
Problem 11-4A Part 5
5. What is the balance of the Estimated Warranty Liability account as of January 31, 2017?
PLEASE DO ALL 5 PARTS!!!
Required information
Problem 11-4A Warranty expense and liability estimation LO P4
[The following information applies to the questions displayed below.]
On October 29, 2016, Lobo Co. began operations by purchasing razors for resale. Lobo 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 $15 and its retail selling price is $90 in both 2016 and 2017. The manufacturer has advised the company to expect warranty costs to equal 6% of dollar sales. The following transactions and events occurred.
2016
| Nov. | 11 | Sold 60 razors for $5,400 cash. | ||
| 30 | Recognized warranty expense related to November sales with an adjusting entry. | |||
| Dec. | 9 | Replaced 12 razors that were returned under the warranty. | ||
| 16 | Sold 180 razors for $16,200 cash. | |||
| 29 | Replaced 24 razors that were returned under the warranty. | |||
| 31 | Recognized warranty expense related to December sales with an adjusting entry. |
2017
| Jan. | 5 | Sold 120 razors for $10,800 cash. | ||
| 17 | Replaced 29 razors that were returned under the warranty. | |||
| 31 | Recognized warranty expense related to January sales with an adjusting entry. |
Problem 11-4A Part 1
1.1 Prepare journal entries to record above transactions and adjustments for 2016.
1.2 Prepare journal entries to record above transactions and adjustments for 2017.
Problem 11-4A Part 2
2. How much warranty expense is reported for November 2016 and for December 2016?
Problem 11-4A Part 3
3. How much warranty expense is reported for January 2017?
Problem 11-4A Part 4
4. What is the balance of the Estimated Warranty Liability account as of December 31, 2016?
Problem 11-4A Part 5
5. What is the balance of the Estimated Warranty Liability account as of January 31, 2017?
Related questions
On October 29, 2012, Lobo Co. began operations by purchasingrazors for resale. Lobo uses the perpetual inventory method. Therazors have a 90-day warranty that requires the company to replaceany nonworking razor. When a razor is returned, the companydiscards it and mails a new one from Merchandise Inventory to thecustomer. The company's cost per new razor is $16 and its retailselling price is $80 in both 2012 and 2013. The manufacturer hasadvised the company to expect warranty costs to equal 7% of dollarsales. The following transactions and events occurred. |
| 2012 |
| Nov. | 11 | Sold 50 razors for $4,000cash. |
| 30 | Recognized warranty expenserelated to November sales with an adjusting entry. | |
| Dec. | 9 | Replaced 10 razors that werereturned under the warranty. |
| 16 | Sold 150 razors for $12,000cash. | |
| 29 | Replaced 20 razors that werereturned under the warranty. | |
| 31 | Recognized warranty expenserelated to December sales with an adjusting entry. |
| 2013 |
| Jan. | 5 | Sold 100 razors for $8,000cash. |
| 17 | Replaced 25 razors that werereturned under the warranty. | |
| 31 | Recognized warranty expense related to January sales with anadjusting entry. |
| 1.1 | Prepare journal entries to record above transactions andadjustments for 2012.
|
[The following information applies to the questionsdisplayed below.]
On October 29, 2014, Lobo Co. began operations by purchasingrazors for resale. Lobo uses the perpetual inventory method. Therazors have a 90-day warranty that requires the company to replaceany nonworking razor. When a razor is returned, the companydiscards it and mails a new one from Merchandise Inventory to thecustomer. The company's cost per new razor is $14 and its retailselling price is $80 in both 2014 and 2015. The manufacturer hasadvised the company to expect warranty costs to equal 6% of dollarsales. The following transactions and events occurred. |
| 2014 |
| Nov. | 11 | Sold 80 razorsfor $6,400 cash. |
| 30 | Recognizedwarranty expense related to November sales with an adjustingentry. | |
| Dec. | 9 | Replaced 16razors that were returned under the warranty. |
| 16 | Sold 240 razorsfor $19,200 cash. | |
| 29 | Replaced 32razors that were returned under the warranty. | |
| 31 | Recognizedwarranty expense related to December sales with an adjustingentry. |
| 2015 |
| Jan. | 5 | Sold 160 razorsfor $12,800 cash. |
| 17 | Replaced 37razors that were returned under the warranty. | |
| 31 | Recognizedwarranty expense related to January sales with an adjustingentry. |
1a. Prepare journal entries to record these transactions andadjustments for 2014.
1b. Prepare journal entries to record these transactions andadjustments for 2015.
2. How much warranty expense is reported for November 2014 andfor December 2014?
3. How much warranty expense is reported for January 2015?
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At the start of the current year, SBC Corp. purchased 30% of SkyTech Inc. for $53 million. At the time of purchase, the carryingvalue of Sky Tech's net assets was $90 million. The fair value ofSky Tech's depreciable assets was $20 million in excess of theirbook value. For this year, Sky Tech reported a net income of $90million and declared and paid $20 million in dividends. |
The amount of purchased goodwill is: |
$20 million.
$33 million.
$73 million.
None of the above is correct.
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Universal Travel Inc. borrowed $500,000 on November 1, 2016, andsigned a 12-month note bearing interest at 6%. Interest is payablein full at maturity on October 31, 2017. In connection with thisnote, Universal Travel Inc. should report interest payable atDecember 31, 2016, in the amount of (Do not roundintermediate calculations. Round your final answer to the nearestwhole dollar amount): |
$5,000.
$20,000.
$25,000.
$30,000.
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Oklahoma Oil Corp. paid interest of $779,000 during 2016, andthe interest payable account decreased by $122,500. What wasinterest expense for the year? |
$656,500.
$779,000.
$901,500.
$534,000.
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Lake Co. receives nonrefundable advance payments with specialorders for containers constructed to customer specifications.Related information for 2016 is as follows ($ in millions): |
Customer advances balance, Dec. 31, 2015 | $118 |
Advances received with 2016 orders | 203 |
Advances applicable to orders shipped in 2016 | 181 |
Advances from orders canceled in 2016 | 43 |
What amount should Lake report as a current liability foradvances from customers in its Dec. 31, 2016, balance sheet? |
$97 million.
$0 million.
$321 million.
$140 million.
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On December 31, 2016, L Inc. had a $3,200,000 note payableoutstanding, due July 31, 2017. L borrowed the money to financeconstruction of a new plant. L planned to refinance the note byissuing long-term bonds. Because L temporarily had excess cash, itprepaid $670,000 of the note on January 23, 2017. In February 2017,L completed a $4,700,000 bond offering. L will use the bondoffering proceeds to repay the note payable at its maturity and topay construction costs during 2017. On March 13, 2017, L issued its2016 financial statements. What amount of the note payable should Linclude in the current liabilities section of its December 31,2016, balance sheet? |
$2,530,000.
$3,200,000.
$0.
$670,000.
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Branch Company, a building materials supplier, has $18,900,000of notes payable due April 12, 2017. At December 31, 2016, Branchsigned an agreement with First Bank to borrow up to $18,900,000 torefinance the notes on a long-term basis. The agreement specifiedthat borrowings would not exceed 75% of the value of the collateralthat Branch provided. At the date of issue of the December 31,2016, financial statements, the value of Branch's collateral was$19,100,000. On its December 31, 2016, balance sheet, Branch shouldclassify the notes as follows: |
$18,900,000 of long-term liabilities.
$18,900,000 of current liabilities.
$14,325,000 long-term and $4,575,000 current liabilities.
$4,725,000 long-term and $14,175,000current liabilities.
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At the beginning of 2016, Angel Corporation began offering a2-year warranty on its products. The warranty program was expectedto cost Angel 6% of net sales. Net sales made under warranty in2016 were $207 million. Fifteen percent of the units sold werereturned in 2016 and repaired or replaced at a cost of $5.20million. The amount of warranty expense on Angel's 2016 incomestatement is: |
$31.05 million.
$12.42 million.
$5.20 million.
$15.82 million.
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