Question

Parton Company provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation cost is $196,800. The journal entry to record the adjusting entry required on December 31 to record the current month's accrued vacation pay will include a
a. credit to Vacation Pay Expense for $196,800.
b. debit to Vacation Pay Expense for $16,400.
c. credit to Vacation Pay Expense for $16,400.
d. debit to Vacation Pay Payable for $196,800.

Answer 1

Answer:

b. debit to Vacation Pay Expense for $16,400.

Explanation:

current month's accrued = total current's vacaction cost/12

                                         = $196,800/12

                                          = $16,900

Adjusting journal entry will be:

                                                     Dr               Cr

vacation pay expenses              $19,600              

 to vacation payable                                      $16,900

Therefore, The  journal entry to record the adjusting entry required on December 31 to record the current month's accrued vacation pay will include a debit to Vacation Pay Expense for $16,400.