Exercise- Accounting for estimated liabilities
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, 32 employees qualify for one vacation day each. Their average daily wage is $300 per employee.
2. During December, Maxum Company sold 3,200 units of a product that carries a 60-day warranty. December sales for this product total $129,000. The company expects 8% of the units to need warranty repairs, and it estimates the average repair cost per unit will be $11.
Prepare any necessary adjusting entries at December 31, 2015, for Maxum Company's year-end financial statements for each of the above separate transactions and events.
Exercise- A Gross and net pay computation
Lenny Florita, an unmarried employee, works 50 hours in the week ended January 12. His pay rate is $11 per hour, and his wages are subject to no deductions other than FICA-Social Security, FICA-Medicare, and federal income taxes. He claims four withholding allowances. Compute his regular pay, overtime pay (for this company, workers earn 150% of their regular rate for hours in excess of 40 per week), and gross pay. Then compute his FICA tax deduction (use 6.2% for the Social Security portion and 1.45% for the Medicare portion), income tax deduction (use the wage bracket withholding table from Exhibit 9A.6.), total deductions, and net pay. (Round your intermediate calculations and final answers to 2 decimal places.)