Question

Martin Services Company provides its employees vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $42,000 for the period. The pension plan requires a contribution to the plan administrator equal to 7% of employee salaries. Salaries were $700,000 during the period.

a. Provide the journal entry for the vacation pay. If an amount box does not require an entry, leave it blank.

b. Provide the journal entry for the pension benefit. If an amount box does not require an entry, leave it blank.

Answer 1

a.

On Vacation Pay Accrual:

Vacation Expense Account Dr 42000

To Vacation Payable Account 42000

On Vacation Pay taken by employees:

Vacation Payable Account Dr 42000

To Cash Account 42000

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b.

Contribution by Administrator= 7% of 700000 = 49000

On Pension Benefit Accrual:

Pension Expense Account Dr 49000

To Pension Payable Account 49000

On Pension Benefit Payment:

Pension Payable Account Dr 49000

To Cash Account 49000