PE 11-6A 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. Provide the journal entry for the (a) vacation pay and (b) pension benefit.


Answer:

a.
 Vacation Pay Expense 19,500
Vacation Pay Payable 19,500
Vacation pay accrued for the period.
b.
 Pension Expense 15,600
Cash 15,600
To record pension contribution,
6% × $260,000.