Of a company's employees, 75 percent typically qualify to receive two weeks' paid vacation per year (50 weeks). The entry to record the amount of estimated liability for vacation pay for a week in which the total payroll is $9,600 is

Question

Quizplus · Accepted Answer

To calculate the estimated liability for vacation pay for a week when the total payroll is $9,600, we need to determine the portion of the payroll that is eligible for vacation pay. Since 75% of the employees qualify for two weeks of paid vacation per year, the eligible portion of the payroll is:

$9,600 x 75% = $7,200

The entry to record the estimated liability for vacation pay should include both the expense and the liability accounts. Option B is the only one that correctly pairs "Vacation Pay Expense" and "Estimated Liability for Vacation Pay" with the amount of $288.

Of a Company's Employees, 75 Percent Typically Qualify to Receive