Asked by Martin Sanchez on May 01, 2024
Verified
Zennia Company provides its employees with varying amounts of vacation per year, depending on their length of employment. The estimated amount of the current year's vacation cost is $135,000. On December 31, the end of the current year, the current month's accrued vacation pay is
A) $135,000
B) $67,500
C) $0
D) $11,250
Accrued Vacation Pay
The amount of earned vacation time that an employee has not yet taken or been paid for, represented as a liability on the company's balance sheet.
Current Year
The present calendar or fiscal year in which a business is operating or reporting financial activities.
Vacation Cost
Expenses incurred by an individual or family during a vacation or by companies for employees' vacation benefits.
- Understand the accounting treatment for product warranty liabilities and how to estimate and record warranty expenses.
Verified Answer
ZK
Zybrea KnightMay 08, 2024
Final Answer :
D
Explanation :
The estimated vacation cost for the year is $135,000. To find the monthly accrued amount, divide the annual cost by 12 months ($135,000 / 12 = $11,250). Therefore, the accrued vacation pay for the current month is $11,250.
Learning Objectives
- Understand the accounting treatment for product warranty liabilities and how to estimate and record warranty expenses.