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6 April, 19:47

Little Company provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation cost is $172,800. The journal entry to record the adjusting entry required on December 31, the end of the current year, to record the current month's accrued vacation pay is:

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  1. 6 April, 22:18
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    vacation wages expense 172,800 debit

    vacation wages payable 172,800 credit

    --year-end adjusting entry for vacation cost--

    Explanation:

    The company will declare a liability for the expected amount. As the current year wages generate benefit to his employees for 172,800. These benefit are an obligation to the company to pay holidays in the following months.

    To match the expenses with the time they are generate we also need to declare the vacation expense
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