9-4
On October 29, 2016, 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 $90 in both 2016 and 2017. The manufacturer hasadvised the company to expect warranty costs to equal 9% of dollarsales. The following transactions and events occurred.
2016
| Nov. | | 11 | | Sold 50 razors for $4,500 cash. |
| | 30 | | Recognized warranty expense related to November sales with anadjusting entry. |
| Dec. | | 9 | | Replaced 10 razors that were returned under the warranty. |
| | 16 | | Sold 150 razors for $13,500 cash. |
| | 29 | | Replaced 20 razors that were returned under the warranty. |
| | 31 | | Recognized warranty expense related to December sales with anadjusting entry. |
2017
| Jan. | | 5 | | Sold 100 razors for $9,000 cash. |
| | 17 | | Replaced 25 razors that were returned under the warranty. |
| | 31 | | Recognized warranty expense related to January sales with anadjusting entry. |
2. How much warranty expense is reported forNovember 2016 and for December 2016
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| | | | Warranty expense for November 2016 | | | Warranty expense forDecember 2016 |
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3. How much warranty expense is reported forJanuary 2017?
  4. What is the balance of theEstimated Warranty Liability account as of December 31, 2016?
 Â
5. What is the balance of the EstimatedWarranty Liability account as of January 31, 2017?
 Â
