Exercise 11-12 Accounting for estimated liabilities LO P4 Listed below are a few

Question

Exercise 11-12 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, 37 employees qualify for one vacation day each. Their average daily wage is $290 per employee 2. During December, Maxum Company sold 4,300 units of a product that carries a 60-day warranty. December sales for this product total $132,000. The company expects 6% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $15 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. View transaction list

Explanation / Answer

1. Employees earn vacation payat a rate of one day per month. during december, 37 employees qualify for one vacation day each. their average daily wage is $290 per employee:-

2. During december, maxum company sold 4,300 units of a product that carries a 60-day warranty. december sales for this product total $132,000. the company expects 6% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $15:-

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Transaction General Journal Debit Credit 1 Vacation benefit expenses 10,730 vacation benefit payable 10,730 (37 employee * 1 day * $290)

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