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. maxum estimated and must expense $3,240 of accrued vacation benefits for the year. 2. during december, maxum company sold 3,000 units of a product that carries a 60 - day warranty. december sales for this product total $139,000. the company expects 7% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $16. prepare adjusting entries at december 31 for maxum companys year - end financial statements for each of the above separate transactions. journal entry worksheet a b employees earn vacation pay at a rate of one day per month. maxum estimated and must expense $3,240 of accrued vacation benefits for the year. record the related adjusting entry. note: enter debits before credits.

Explanation:

Step1: Record vacation - pay accrual

Debit Vacation Benefits Expense $3,240; Credit Vacation Benefits Payable $3,240. This records the expense for the accrued vacation benefits that employees have earned but not yet been paid.

Step2: Calculate warranty expense

The number of units expected to need repairs is $3000\times7\% = 210$ units. The total estimated warranty cost is $210\times16=\$3,360$.

Step3: Record warranty - related adjusting entry

Debit Warranty Expense $3,360; Credit Estimated Warranty Liability $3,360. This records the expected cost of warranty repairs for the December sales.

Answer:

1.

Account Title	Debit	Credit
Vacation Benefits Payable		$3,240

2.

Account Title	Debit	Credit
Estimated Warranty Liability		$3,360