One of the employees of the Hill Company earns one month of vacation per year.The employee's annual salary is $132,000.The employee is paid monthly.How would the company record the monthly vacation expense?
A)Debit Vacation Benefits Expense for $1,000 and credit Vacation Benefits Payable for $1,000.
B)Debit Vacation Benefits Payable for $1,000 and credit Vacation Benefits Expense for $1,000.
C)Debit Salary Expense for $12,000,credit Salaries Payable for $11,000,and credit Vacation Benefits Payable for $1,000.
D)Debit Vacation Benefits Expense for $1,000 and credit Cash for $1,000.
E)Debit Vacation Benefits Payable for $1,000 and credit Cash for $1,000.

Question

Quizplus · Accepted Answer

The company would record the monthly vacation expense by debiting Vacation Benefits Expense for $1,000 (1/12 of the employee's yearly vacation benefit) and crediting Vacation Benefits Payable for $1,000 (as the amount will not be paid out until the employee takes their vacation).

One of the Employees of the Hill Company Earns One