Roberts Company Is Preparing Monthly Adjusting Entries at December 31

question 13

Essay

Roberts Company is preparing monthly adjusting entries at December 31. An analysis reveals the following:
1. During December, Roberts 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 $20.
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 $80 per employee.
Instructions
Prepare adjusting entries, if required, for each of the four items.

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Definitions:

Constitutional Convention

A formal gathering for the purpose of creating or amending a constitution.

Amended

Officially modified, edited, or revised typically referring to documents, laws, or agreements to bring them up to date or improve them.

Annapolis Convention

A convention held in 1786 to address weaknesses in the Articles of Confederation that led to the drafting of the U.S. Constitution.

Delegates

Representatives who are chosen or elected to attend and vote at a conference or convention on behalf of a group.