Listed below are a few transactions and events of Maxum Company

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.
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.

 

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.

Explanation:

Vacation benefits expense = 35 employees × 1 day × $130 = $4,550.

Warranty expense = 4,900 units × 6% × $17 = $4,998.

Following are selected transactions Danica Company for 2014 and 2015.

Following are selected transactions Danica Company for 2014 and 2015.

  

2014

Dec.	13	Accepted a $28,000, 45-day, 10% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.
	31	Prepared an adjusting entry to record the accrued interest on the Lee note.

2015

Jan.	27	Received Lee's payment for principal and interest on the note dated December 13.
Mar.	3	Accepted a $22,000, 8%, 90-day note dated March 3 in granting a time extension on the past-due account receivable of Tomas Company.
	17	Accepted a $20,000, 30-day, 6% note dated March 17 in granting H. Cheng a time extension on his past-due account receivable.
Apr.	16	H. Cheng dishonors his note when presented for payment.
May	1	Wrote off the H. Cheng account against the Allowance for Doubtful Accounts.
June	1	Received the Tomas payment for principal and interest on the note dated March 3.

   

First, complete the table below to calculate the interest amounts. (Do not round intermediate calculations and round your final answers to nearest whole dollar. Use 360 days a year.)

   

M. Lee Note:

Tomas Co Note: H. Cheng Note: Use those calculated values to prepare your journal entries. Explanation: Jan 27   To record cash received on note plus interest $28,000 × 0.10 × (45−18) / 360 = $210 Apr. 16   To record receivable for dishonored $20,000 × 0.06 × 30 / 360 = $100 June 1   To record cash received on note with $22,000 × 0.08 × 90 / 360 = $440