Zennia Company provides its employees with varying amount of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation cost is $135,000. The journal entry to record the adjusting entry required on December 31, the end of the current year, to record the current month's accrued vacation pay is
A) $135,000
B) $67,500
C) $0
D) $11,250

Question

Quizplus · Accepted Answer

The adjusting entry to record the current month's accrued vacation pay is to debit Vacation Expense for $11,250 and credit Vacation Payable for $11,250. The estimated amount of the current year's vacation cost is $135,000, and the adjusting entry is made at the end of the current year, December 31. The adjusting entry is made to record the expense and liability for the vacation pay that has been earned but not yet paid to the employees.

Zennia Company Provides Its Employees with Varying Amount of Vacation