Listed below are a few transactions and events of Maxum Company.
Employees earn vacation pay at a rate of one day per month. During December, 31 employees qualify for one vacation day each. Their average daily wage is $130 per employee.
During December, Maxum Company sold 4,900 units of a product that carries a 60-day warranty. December sales for this product total $137,000. The company expects 8% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $18.
Prepare any necessary adjusting entries at December 31, 2013, for Maxum Company’s year-end financial statements for each of the above separate transactions and events.
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