Question

JWS Transport Company’s employees earn vacation time at the rate of 1 hour per 30-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates). During 2021, total salaries paid to employees equaled $426,000, including $3,000 for vacations actually taken in 2021 but not including vacations related to 2021 that will be taken in 2022. All vacations earned before 2021 were taken before January 1, 2021. No accrual entries have been made for the vacations. No overtime premium and no bonuses were paid during the period.

Required:
Prepare the appropriate adjusting entry for vacations earned but not taken in 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

	Calculation of Amount of vocations earned but not considered in the year 2021
	Employee benefit = 1 hour/30 hour of wages paid to employee
	Total Wages Earned (Excluding Vocation Benefit) = $426000-3000 =$423000
	Real Vocation Benefit = 423000 * 1/30
			=$14100
	therfore vocation earned but not considered in 2021
		=$14100 -3000
		=11100
	Journal Entries
	Date	Title	Dr	Cr
	2021	Vocation Benefit Expenses	11100
		Vocation Benefit Payable		11100
		(recording of vocation benefit not
		considered in 2021)