An owner withdrawal of $20,000 would_______.
1 answer:
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Answer:
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 $160 per employee.
2. During December, Maxum Company sold 4,500 units of a product that carries a 60-day warranty. December sales for this product total $125,000. The company expects 7% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $10.
Prepare any necessary adjusting entries at December 31, 2017, for Maxum Company’s year-end financial statements for each of the above separate transactions and events.
Vacation benefits expense
= number of employees × number(s) of day × the average daily wage per employee
Given,
number of employees = 35
number(s) of day = 1
The average daily wage per employee = $160
= 35 employees × 1 day × $160
= $5,600
Warranty expense
= number of units of products sold × percentage of the units for warranty × the average repair cost per unit
Given,
number of units of products sold = 4500 units
percentage of the units for warranty = 7%
The average repair cost per unit = $10
= 4,500 units × 7% × $10
= $3,150
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