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

	Warranty expense for November 2016 Warranty expense forDecember 2016

3. How much warranty expense is reported forJanuary 2017?
  4. What is the balance of theEstimated Warranty Liability account as of December 31, 2016?
  

5. What is the balance of the EstimatedWarranty Liability account as of January 31, 2017?