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Vacation pay and pension benefits Fukushima Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $19,500 for the period. The pension plan requires a contribution to the plan administrator equal to 6% of employee salaries. Salaries were $260,000 during the period, and the full amount due was contributed to the pension plan administrator. Provide the journal entry for the (a) vacation pay and (b) pension benefit.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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Section
BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 11, Problem 6PEA
Textbook Problem
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Vacation pay and pension benefits

Fukushima Company provides its employees with vacation benefits and a defined contribution pension plan. Employees earned vacation pay of $19,500 for the period. The pension plan requires a contribution to the plan administrator equal to 6% of employee salaries. Salaries were $260,000 during the period, and the full amount due was contributed to the pension plan administrator.

Provide the journal entry for the (a) vacation pay and (b) pension benefit.

a.

To determine

Journalize vacation pay expense.

Explanation of Solution

Vacation expense: Vacation expense is an estimated expense for the company which the company should pay to the employees as extra salary over the entire year. For example: If an employee works 49 weeks in a year, company should pay 3 weeks’(52 weeks  49 weeks) extra salary as a vacation expense.

Prepare journal entry to record vacation pay expense.

DateAccounts and ExplanationPost Ref<

b.

To determine

Journalize Pension benefit.

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Chapter 11 Solutions

Financial Accounting
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