Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $968,000 to be paid during January of the following year. The joumal entry on December 31 to record the bonuses is:
Multiple Choice
Debit Uneamed Bonuses $968,000, credit Bonus Payable $968,000
Debit Employee Bonus Expense $968,000 credit Bonus Payable $968,000
No entry since the bonuses are not paid until January
Debit Estimated Bonus Payable $968,000 credit Cash $968,000
Debit Employee Bonus Expense $068,000; credit Prepaid Employee Blonus $968,000
Homework Answers
Estimated bonus payable = $968,000
Bonus has accrued in December but it will be paid in January of the next year.
Increase in expense is debited and hence employee bonus expense will be debited.
increase in liabilities is credited and hence bonus payable will be credited.
Second option is correct.
Kindly comment if you need further assistance. Thanks‼!
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