Thursday, 29 November 2012
Listed below are a few transactions and events of Jester Company.
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Listed below are a few
transactions and events of Jester Company.
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1.
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During December,
Jester Company sold 3,000 units of a product that carries a 60-day warranty.
December sales for this product total $120,000. The company expects 8% of the
units to need warranty repairs, and it estimates the average repair cost per
unit will be $15.
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2.
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Employees earn
vacation pay at a rate of one day per month. During December, 20 employees
qualify for one vacation day each. Their average daily wage is $120 per
employee.
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Prepare any necessary
adjusting entries at December 31, 2011, for Jester Company’s year-end
financial statements for each of the above separate transactions and events. (Omit the "$" sign in your response.)
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General Journal
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Debit
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Credit
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1.
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Warranty expense
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Estimated warranty
liability
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2.
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Vacation benefits
expense
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Vacation benefits
payable
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Explanation:
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Warranty expense =
3,000 units × 8% × $15 = $3,600.
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Vacation benefits
expense = 20 employees × 1 day × $120 = $2,400.
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