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, 26 employees qualify for one vacation day each. Their average daily wage is $150 per employee.
2. During December, Maxum Company sold 3,300 units of a product that carries a 60-day warranty. December sales for this product total $135,000. The company expects 5% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $13.

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, 26 employees qualify for one vacation day each. Their average daily wage is $150 per employee. Record the related adjusting entry. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

No	Account	Debit	Credit
1	Vacation benefit expense	3900
	Vacation benefit payable		3900
	(1*26*150)
2	Warranty expense	2145
	Estimated warranty liability		2145
	(3300*13*5%)

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