Exercise 11-15 (Algo) Accounting for estimated liabilities LO P4

Listed below are a few transactions and events of Maxum Company.

1. Employees earn vacation pay at a rate of one day per month. Maxum estimated and must expense $4,050 of accrued vacation benefits for the year.
2. During December, Maxum Company sold 4,300 units of a product that carries a 60-day warranty. December sales for this product total $125,000. The company expects 9% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $13.

Prepare adjusting entries at December 31 for Maxum Companys year-end financial statements for each of the above separate transactions.

A. Employees earn vacation pay at a rate of one day per month. Maxum estimated and must expense $4,050 of accrued vacation benefits for the year. Record the related adjusting entry.

B. During December, Maxum Company sold 4,300 units of a product that carries a 60-day warranty. December sales for this product total $125,000. The company expects 9% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $13. Record the related adjusting entry.

Problem 2) On January 8, the end of the first weekly pay period of the year, Regis Company's employees earned $23,760 of office salaries and $60,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.2%, FICA Medicare taxes at the rate of 1.45%, $12,860 of federal income taxes, $1,320 of medical insurance deductions, and $880 of union dues. No employee earned more than $7,000 in this first period. Required: 1-a. Calculate below the amounts for each of these four taxes of Regis Company. Regiss state unemployment tax rate is 5.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%. 1-b. Prepare the journal entry to record Regis Company's January 8 employee payroll expenses and liabilities. 2. Prepare the journal entry to record Regiss employer payroll taxes resulting from the January 8 payroll. Regiss state unemployment tax rate is 5.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%.

Regis Companys:
Tax	January 8 Earnings Subject to Tax	Tax Rate	Tax Amount
FICASocial Security
FICAMedicare
FUTA
SUTA

Journal Entry:

- (Jan. 8) Record Regis Company's January 8th employee payroll expenses and liabilities for the first weekly pay period of the year.

- (Jan. 8) Prepare the journal entry to record Regiss employer payroll taxes resulting from the January 8 payroll expenses and liabilities for the first weekly pay period of the year. Regiss state unemployment tax rate is 5.4% of the first $7,000 paid to each employee. The federal unemployment tax rate is 0.6%.