| 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, 35 employees qualify for one vacation day each. Their average daily wage is $130 per employee.
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| 2. |
During December, Maxum Company sold 4,900 units of a product that carries a 60-day warranty. December sales for this product total $127,000. The company expects 6% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $17.
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Prepare any necessary adjusting entries at December 31, 2015, for Maxum Company’s year-end financial statements for each of the above separate transactions and events.
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| Vacation benefits expense = 35 employees × 1 day × $130 = $4,550. |
| Warranty expense = 4,900 units × 6% × $17 = $4,998. |
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