Vacation Pay Liability Vacation pay is an accrued cost estimated for the company that is allocated for the entire year. It is amount earned by an employee as per employee benefit policy. It is liability for employer. Example: When an employee works for 49 weeks, he can earn 3 weeks (52 weeks –49 weeks) extra salary. This is a vacation pay. To prepare : Prepare adjustment entry for vacations earned but not taken in 2016.

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Chapter 13, Problem 13.5E

1

To determine

Vacation Pay Liability

Vacation pay is an accrued cost estimated for the company that is allocated for the entire year. It is amount earned by an employee as per employee benefit policy. It is liability for employer. Example: When an employee works for 49 weeks, he can earn 3 weeks (52 weeks –49 weeks) extra salary. This is a vacation pay.

To prepare: Prepare adjustment entry for vacations earned but not taken in 2016.

2

To determine

To prepare: Prepare journal entry for 2017 wages and the payment for 2016 vacations taken in 2017.

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