On January 1, 2016, Yukon Company agreed to grant its employees two weeks vacation each year, with the provision that vacations earned in a particular year could be taken the following year. For the year ended December 31, 2016, all twelve of Yukon's employees earned $1,200 per week each. Eight of these vacation weeks were not taken during 2016. In Yukon's 2016 income statement, how much expense should be reported for compensated absences?
Multiple Choice
$0
$9,600
$14,400
$28,800
Answer : $9,600
Explanation : Since 8 vacation weeks were not taken during 2016 , Yukon's 2016 income statement should report $9,600 ( 8 * $1,200) .
Journal Entry :
Debit | Credit | |
Salary expense | $9,600 | |
Liability – compensated future absences | $9,600 | |
( To record vacations earned but not taken) |
On January 1, 2016, Yukon Company agreed to grant its employees two weeks vacation each year,...
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