Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year.The journal entry on December 31 to record the bonuses is:

A) Debit Estimated Bonus Payable $32,500; credit Cash $32,500.
B) Debit Employee Bonus Expense $32,500; credit Bonus Payable $32,500.
C) No entry since the bonuses are not paid until January.
D) Debit Employee Bonus Expense $32,500; credit Prepaid Employee Bonus $32,500.
E) Debit Unearned Bonuses $32,500; credit Bonus Payable $32,500.

The journal entry to record employee bonuses should be a debit to Employee Bonus Expense for the estimated amount of $32,500 and a credit to Bonus Payable for the same amount. This entry recognizes the expense in the current year and the liability for the unpaid bonuses. Choice A is incorrect because it does not recognize the liability for the unpaid bonuses. Choice C is incorrect because the bonuses should be recorded in the current year. Choice D is incorrect because it suggests that the company has prepaid the employee bonuses when in fact they are unpaid. Choice E is incorrect because Unearned Bonuses is not a commonly used account and does not accurately reflect the liability for the unpaid bonuses.