Fukushima Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $23,000 for the period. The pension plan requires a contribution to the plan administrator equal to 6% of employee salaries. Salaries were $262,000 during the period, and the full amount due was contributed to the pension plan administrator. On December 31, provide the journal entry for the (a) vacation pay on page 11 of the journal and (b) pension benefit on page 12 of the journal. Refer to the Chart of Accounts for exact wording of account titles.
The required journal entries for the vacation pay and pension benefit is shown as follows:-
Journal Entries (Amounts in $)
Date | Account Titles and Explanations | Debit | Credit |
Dec 31 | Vacation Pay Expense | 23,000 | |
Vacation Pay Payable | 23,000 | ||
(To record the vacation pay expense payable) | |||
Dec 31 | Pension Expense (262,000*6%) | 15,720 | |
Cash | 15,720 | ||
(To record the contribution to pension benefit) |
Working Notes:-
1) Vacation pay is earned but not paid, therefore vacation pay expense is debited and vacation pay payable is credited.
2) Contribution for pension plan is paid to plan administrator, therefore pension expense is debited and cash is credited by an amount equal to 6% of salaries. (i.e. $262,000*6%).
Fukushima Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned...
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