need answer for adjusting entries at December 31, 2011?
During December, Jester Company sold 3,000 units of a product that carries a 60-day warranty. December sales for this product total $120,000. The company expects 8% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $15.
Employees earn vacation pay at a rate of one day per month. During December, 20 employees qualify for one vacation day each. Their average daily wage is $120 per employee.
Prepare any necessary adjusting entries at December 31, 2011, for Jester Company’s year-end financial statements for each of the above separate transactions and events
1. The number of units expected to be returned is 3000 x 8% = 240
The expected repair costs are 240 x 15 = 3600
Repair costs 3600 DR
Accruals 3600 CR
Provision for expected repair costs
2. Holiday pay to accrue for is 20 x 1 x 120 = 2400
Holiday pay 2400 DR
Accruals 2400 CR
Provision for holiday pay