Question

Martin Services Company provides its employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $50,000 for the period. The pension plan requires a contribution to the plan administrator equal to 8% of employee salaries. Salaries were $700,000 during the period.

a. Provide the journal entry for the vacation pay.

b. Provide the journal entry for the pension benefit.

Answer 1

Journal Entries
Date	Account Title and explaination		Debit	Credit
a.	Vacation and Holidays expenses Dr.		$ 50,000.00
	To vacation and Holidays payable			$ 50,000.00
	(To record the Entry for Vacation pay)
b.	Pension Expense                             Dr.		$ 56,000.00			700000*8%
	To Pension Liability			$ 56,000.00
	(To record entry for pension Benefit)