Question

Blount Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $30,000 for the period. The pension plan requires a contribution to the plan administrator equal to 10% of employee salaries. Salaries were $400,000 during the period.

Provide the journal entry for the (a) vacation pay and (b) pension benefit.

Hobson Equipment Company provides its employees vacation benefits and a defined benefit pension plan. Employees earned vacation pay of $20,000 for the period. The pension formula calculated a pension cost of $140,000. Only $106,000 was contributed to the pension plan administrator.

Provide the journal entry for the (a) vacation pay and (b) pension benefit.

Answer 1

6A.

(a)

Date	Particulars	Dr.	Cr.
	Vacation Pay Expense	$30,000
	Vacation Pay Payable		$30,000
	[Vacation pay accrued for the Period]

(b)

Date	Particulars	Dr.	Cr.
	Pension Expense	$40,000
	Cash		$40,000
	[Pension Contribution, 10% of $400,000 salary]

6B.

(a)

Date	Particulars	Dr.	Cr.
	Vacation Pay Expense	$20,000
	Vacation Pay Payable		$20,000
	[Vacation pay accrued for the Period]

(b)

Date	Particulars	Dr.	Cr.
	Pension Expense	$140,000
	Cash		$106,000
	Unfunded Pension Liabilities		$34,000