Question

McNight Industries completed the following transactions during 2018:

Answer 1

Answer:

                                     Journal Entries

Date          Accounts Titles                         Debit           Credit

Nov 1   Warranty expense                     $3,120

                   ($52,000 * 6%)  

                     Estimated warranty payable                     $3,120

Nov 20       Estimated warranty payable     $1,600

                        Cash                                                         $1,600

Dec 31        Vacation benefit expense         $6,000  

                        Vacation benefit payable                        $6,000

Dec 31      Employee bonus expense          $1 ,515

                         Employee bonus payable                       $1,515

Working

Bonus = 3% * (Net income-Bonus)

Let bonus= x

x = 3% * (52,000 - (1+x))

x = 0.03 * (52,000- (1+x))

x = 1560 - 1.03

1.03x = 1560

x = $1,560 / 1.03

x =  $1,514.5631

Bonus= $1,515