9. value: 2.10 points Exercise 9-12 Accounting for estimated liabilities LO P4 L

Question

9. value: 2.10 points Exercise 9-12 Accounting for estimated liabilities LO P4 Listed below are a few transactions and events of Maxum Company. 1. Employees earn vacation pay at a rate of one day per month. During December, 38 employees qualify for one vacation day each. Their average daily wage is $230 per employee. 2. During December, Maxum Company sold 4,100 units of a product that carries a 60-day warranty. December sales for this product total $130,000. The company expects 7% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $12. Prepare any necessary adjusting entries at December 31, 2015, for Maxum Company's year-end financial statements for each of the above separate transactions and events. View transaction list Journal entry worksheet 2 Employees earn vacation pay at a rate of one day per month. During December, 38 employees qualify for one vacation day each. Their average daily wage is $230 per employee. Record the related adjusting entry. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Explanation / Answer

Transaction General Journal Debit Credit 1 Vacation benefits expense(38 employees × 1 day × $230) $8,740 Vacation benefits payable $8,740 2 Warranty expense(4,100 units × 7% × $12) $3,444 Estimated warranty liability $3,444

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