During December, Jester Company sold 3,100 units of a product that carries a 60-

Question

  

During December, Jester Company sold 3,100 units of a product that carries a 60-day warranty. December sales for this product total $132,000. The company expects 10% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $17.

Employees earn vacation pay at a rate of one day per month. During December, 23 employees qualify for one vacation day each. Their average daily wage is $260 per employee.

  

Prepare any necessary adjusting entries at December 31, 2011, for Jester Company’s year-end financial statements for each of the above separate transactions and events. (Do not round intermediate calculations and round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

  

Listed below are a few transactions and events of Jester Company.

Explanation / Answer

1

.

Warranty expenses a/c Dr.

To estimated warranty liabilities a/c

$224400

$224400

2

Vacation and holiday expenses a/c Dr.

To vacation and holiday payable a/c

$5980

$5980

wn:-1 number of units the company believes will need to be replaced under warranty = 132000x10% =13200units

  the cost of replacing those potentially defective units = 13200 x $17 = $224400

General Journal Debit Credit

1

.

Warranty expenses a/c Dr.

To estimated warranty liabilities a/c

$224400

$224400

2

Vacation and holiday expenses a/c Dr.

To vacation and holiday payable a/c

$5980

$5980

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