State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service.There are no requirements for research, study or service during the compensated sabbatical leave.A particular faculty member earns $40,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical?
A)Debit Expenditures $40,000; Credit Cash $40,000.
B)Debit Sabbatical leave payable $40,000; Credit Cash $40,000.
C)Debit Expenditures $40,000; Credit Cash $40,000
D)No entry required.

Question

Quizplus · Accepted Answer

The sabbatical leave is a compensated absence that has been earned over the seven years of service. Therefore, the liability for the sabbatical leave should have been accrued over those years, and when the payment is made, it should be debited to the liability account (Sabbatical leave payable) and credited to Cash.

State Community College, a Public College, Grants Faculty Members a One-Year