Prepare any necessary adjusting entries at December 31, 2008, for Casco Company’s year-end financial statements for each of the following separate transactions and events.

1 During December, Casco Company sold 4,000 units of a product that carries a 60-day warranty.

December sales for this product total $150,000. The company expects 8% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $17.

2 A disgruntled employee is suing Casco Company. Legal advisers believe that the company will probably need to pay damages, but the amount cannot be reasonably estimated.

3 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 $150 per employee.

4 Casco Company guarantees the $7,500 debt of a supplier. The supplier will probably not default on the debt.

5 Casco Company records an adjusting entry for $750,000 of previously unrecorded cash sales (costing

$500,000) and its sales taxes at a rate of 5%.

6 The company earned $75,000 of $100,000 previously received in advance for services.

AppendixLO1