State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service.There are no requirements for research, study, or service during the compensated sabbatical leave.A particular faculty member earns $40,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of government-wide financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical?
A)Debit Expenditures $40,000; Credit Cash $40,000.
B)Debit Sabbatical leave payable $40,000; Credit Cash $40,000.
C)Debit Expenditures $40,000; Credit Cash $40,00
D)No entry required.

Question

Quizplus · Accepted Answer

The appropriate entry to record the faculty member's salary paid while on sabbatical is to debit Sabbatical leave payable for $40,000 and credit Cash for $40,000. This is because, in accordance with the terms of their employment contract, the faculty member is entitled to a sabbatical leave after every seven years of service. This leave is considered to be compensated, meaning that the faculty member is paid their regular salary during this time. Therefore, a liability account called Sabbatical leave payable should be recorded for the amount of the faculty member's sabbatical leave salary. When the faculty member returns from sabbatical, the Sabbatical leave payable account will be credited and an expenditure account will be debited for the same amount.

State Community College, a Public College, Grants Faculty Members a One-Year