Wolfe Company employer offers a bonus to its employees based on the company's annual pre-bonus net income (to be equally shared by all).This year's bonuses are estimated at $25,000.How would the company record the year-end adjusting entry to record this benefit?
A)Debit Salaries Expense for $25,000 and credit Employee Bonus Expense for $25,000.
B)Debit Payroll Tax Expense for $25,000 and credit Payroll Taxes Payable for $25,000.
C)Debit Income Summary for $25,000 and credit Retained Earnings for $25,000.
D)Debit Employee Bonus Expense for $25,000 and credit Bonus Payable for $25,000.
E)Debit Bonus Payable for $25,000 and credit Employee Bonus Expense for $25,000.

Question

Quizplus · Accepted Answer

The adjusting entry should debit Employee Bonus Expense for $25,000 to recognize the expense of the bonus and credit Bonus Payable for $25,000 to reflect the liability owed to the employees. This entry will not affect Salaries Expense, Payroll Tax Expense, Income Summary, or Retained Earnings.

Wolfe Company Employer Offers a Bonus to Its Employees Based