Question

Martin Services Company provides their employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $39,500 for the period. The pension plan requires a contribution to the plan administrator equal to 9% of employee salaries. Salaries were $750,000 during the period.a. Provide the journal entry for the vacation pay. b. Provide the journal entry for the pension benefit.

Answer 1

Answer:

Explanation:

a. Provide the journal entry for the vacation pay

Employees earned vacation pay of $39,500 for the period.

                                                       Debit                   Credit

Vacation pay expense A/C          $39,500

Vacation payable A/C                                                $39,500

(Being vacation pay accrued for periods)

b. Provide the journal entry for the pension benefit.

9% of employee salaries and the salaries were $750,000

=> The pension plan requires a contribution to the plan administrator:  $750,000*9% = $67,500

                                                        Debit                   Credit

Pension expense                          $750,000

To cash A/C                                                                   $67,500

To unfunded pension liabilities                                   $683,500          

Hope it will find you well.