Ex. 191 Old Hampton Company is preparing adjusting entries at December 31. An analysis reveals the following: 1. During December, Old Hampton Company sold 3,000 units of a product that carries a 60-day warranty. The sales for this product totaled $100,000. The company expects 4% of the units to need repair under the warranty and it estimates that the average repair cost per unit will be $15. 2. The company has been sued by a disgruntled employee. Legal counsel believes that it is reasonably possible that the company will have to pay $200,000 in damages. 3. The company has been named as one of several defendants in a $400,000 damage suit. Legal counsel believes it is unlikely that the company will have to pay any damages. 4. Employees earn vacation pay at a rate of1 day per month. During December, ten employees qualify for vacation pay. Their average daily wage is $90 per employee. Instructions Prepare adjusting entries, if required, for each of the four items.
Ex. 191 Old Hampton Company is preparing adjusting entries at December 31. An analysis reveals the following: 1. During December, Old Hampton Company sold 3,000 units of a product that carries a 60-day warranty. The sales for this product totaled $100,000. The company expects 4% of the units to need repair under the warranty and it estimates that the average repair cost per unit will be $15. 2. The company has been sued by a disgruntled employee. Legal counsel believes that it is reasonably possible that the company will have to pay $200,000 in damages. 3. The company has been named as one of several defendants in a $400,000 damage suit. Legal counsel believes it is unlikely that the company will have to pay any damages. 4. Employees earn vacation pay at a rate of1 day per month. During December, ten employees qualify for vacation pay. Their average daily wage is $90 per employee. Instructions Prepare adjusting entries, if required, for each of the four items.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Ex. 191
Old Hampton Company is preparing adjusting entries at December 31. An analysis reveals the
following
1. During December, Old Hampton Company sold 3,000 units of a product that carries a 60-day
warranty. The sales for this product totaled $100,000. The company expects 4% of the units
to need repair under the warranty and it estimates that the average repair cost per unit will be
$15.
2. The company has been sued by a disgruntled employee. Legal counsel believes that it is
reasonably possible that the company will have to pay $200,000 in damages.
3. The company has been named as one of several defendants in a $400,000 damage suit.
Legal counsel believes it is unlikely that the company will have to pay any damages.
-4. Employees earn vacation pay at a rate of 1 day per month. During December, ten employees
qualify for vacation pay. Their average daily wage is $90 per employee.
Instructions
Prepare adjusting entries, if required, for each of the four items.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education