Employees earn vacation pay at a rate of one day per month. The company estimated and must expense $1,500 of accrued vacation benefits for the year. Which of the following is the necessary year-end adjusting entry to record accrued vacation benefits?
a) Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation $1,500.
b) Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.
c) Debit Payroll Tax Expense $1,500: credit Payroll Taxes Payable $1.500.
d) Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500

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andromache andromache · Answer 1 · 2021-07-18T02:51:23+02:00

Answer:

b) Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.

Explanation:

The journal entry to record the accrued vacation benefit is given below:

Vacation Benefits Expense $1,500

To Vacation Benefits Payable $1,500

(being the accrued vacation benefit is recorded)

Here vacation benefit expense is debited as it increased the assets and credited the vacation benefit payable as it also increased the liabilities