Question

McNight Industries completed the following transactions during 2018:
Journalize the transactions. Explanations are not required. Round to the nearest dollar. (Record debits first, then credits. Exclude explanations from journal entries.)
Nov. 1: Made sales of $52,000. McNight estimates that warranty expense is 6% of sales. (Record only the warranty expense.)
McNight estimates that warranty expense is 6% of sales. (Record only the warranty expense.)
20 Paid $1,600 to satisfy warranty claims.
31 Estimated vacation benefits expense to be $6,000.
31 McNight expected to pay its employees a 3% bonus on net income after deducting the bonus.
Net income for the year is $52,000. Dec.

Answer 1

Answer:

                                     Journal Entries

Date          Accounts Titles                         Debit           Credit

Nov 1   Warranty expense                     $3,120

                   ($52,000 * 6%)  

                     Estimated warranty payable                     $3,120

Nov 20       Estimated warranty payable     $1,600

                        Cash                                                         $1,600

Dec 31        Vacation benefit expense         $6,000  

                        Vacation benefit payable                        $6,000

Dec 31      Employee bonus expense          $1 ,515

                         Employee bonus payable                       $1,515

Working

Bonus = 3% * (Net income-Bonus)

Let bonus= x

x = 3% * (52,000 - (1+x))

x = 0.03 * (52,000- (1+x))

x = 1560 - 1.03

1.03x = 1560

x = $1,560 / 1.03

x =  $1,514.5631

Bonus= $1,515