Exercise 9-12 Accounting for estimated liabilities LO P4 Listed below are a few

Question

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, 27 employees qualify for one vacation day each. Their average daily wage is $260 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 $135,000. The company expects 6% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $14. 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, 27 employees qualify for one vacation day each. Their average daily wage is $260 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

Vacation benefits expense 7020 =27*260          Vacation benefits payable 7020 Warranty expense 2604 =3100*6%*14         Estimated warranty liability 2604

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