Total payroll for a given week is $34,000.If 70 percent of the company's employees typically qualify to receive two weeks' paid vacation per year (50 weeks),the entry to record estimated liability for vacation pay for the week is

Question

Quizplus · Accepted Answer

To calculate the estimated liability for vacation pay, we need to multiply the total payroll for the week by the percentage of employees who qualify for paid vacation and divide by the number of weeks in a year. 
Estimated Liability for Vacation Pay = ($34,000 x 70%)/50 = $476
The entry to record this would be to debit Vacation Pay Expense for $476 and credit Vacation Pay Liability for $476, which matches option C.

Total Payroll for a Given Week Is $34,000