Chapter 11, Problem 11.15E

To determine

Vacation Pay Liability: Some companies offer paid leaves for employees after they have worked for a certain time. The salary or wage due to be paid for these leaves is called vacation pay liability.

Adjusting Journal Entries: Companies need to record the journal entries at the end of accounting period to apply the matching and revenue recognition principles. These journal entries are adjusting entries. Income, liabilities and the giver are credited if the balance is increased and debited if the balance is reduced. Expenses, assets and the receiver are debited if the balance is increased and credited if the balance is reduced

To prepare: The journal entries for vacation pay expense and pension expense.