Listed below are a few transactions and events of Maxum Company. 1. Employees ea

Question

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, 21 employees qualify for one vacation day each. Their average daily wage is $230 per employee.

2. During December, Maxum Company sold 3,100 units of a product that carries a 60-day warranty. December sales for this product total $136,000. The company expects 8% 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, 2017, for Maxum Company’s year-end financial statements for each of the above separate transactions and events.

Journal entry worksheet Employees earn vacation pay at a rate of one day per month. During December, 21 employees qualify for one vacation day each. ei 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(21 employees × 1 day × $230) $4,830 Vacation benefits payable $4,830 2 Warranty expense(3,100 units × 8% × $12) $2,976 Estimated warranty liability $2,976

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