ACC 304 Course Great Wisdom / tutorialrank.com ACC 304 Course Great Wisdom / tutorialrank.com | Page 251

2) Kasten Inc. provides paid vacations to its employees. At
December 31, 2014, 36 employees have each earned 2 weeks of
vacation time. The employees’ average salary is $513 per week.
Prepare Kasten’s December 31, 2014, adjusting entry. (If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Credit account titles are automatically
indented when amount is entered. Do not indent manually.)

3) Buchanan Company recently was sued by a competitor for
patent infringement. Attorneys have determined that it is
probable that Buchanan will lose the case and that a reasonable
estimate of damages to be paid by Buchanan is $317,310. In
light of this case, Buchanan is considering establishing a
$115,690 self-insurance allowance.

4) Buchanan should record a litigation accrual on the patent
case, since the amount is both estimable and probable. This
entry will reduce income by $317,310 and Buchanan will report
a litigation liability of $317,310. The $115,690 self-insurance
allowance has no impact on income or liabilities.