Question

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:

Answer 1

Answer:

The journal entry which is to be recorded on December 31, is shown below:

Explanation:

On December 31

Employee Bonus Expense A/c..............................Dr     $32,500

            Bonus Payable A/c...........................................Cr      $32,500

As the company offered the bonus plan to the employees which is to be paid in January. So, on December 31,  the bonus will be outstanding, so the account of bonds payable is credited. And it is against the bonus expense, therefore, the account of employee bonus expense is debited.