Question

Vacation Pay and Pension Benefits Harvey Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $15,700 for the period. The pension plan requires a contribution to the plan administrator equal to 8% of employee salaries. Salaries were $168,000 during the period, and the full amount due was contributed to the pension plan administrator. On December 31, provide the journal entry for the:

a. vacation pay on page 11 of the journal
b. pension benefit on page 12 of the journal.

Answer 1

Answer:

A. Dr Vacation pay Expenses $15,700

Cr Vacation pay payable $15,700

B. Dr Pension Expense $13,440

Cr Cash $13,440

Explanation:

a. Preparation of the journal entry to record the vacation pay

Dr Vacation pay Expenses $15,700

Cr Vacation pay payable $15,700

(Being to record Vacation pay accrued for the period )

b. Preparation of the Journal entry to record pension benefit

Dr Pension Expense $13,440

Cr Cash $13,440

(8%*$168,000)

(Being to record pension Contribution)