Accrued Vacation Pay A business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation pay is $106,800. Journalize the adjusting entry required on January 31, the end of the first month of the current year, to record the accrued vacation pay.

On Jan 31

Vacation pay expense Dr $8,900

        To vacation payable $8,900

(Being the vacation expense is recorded)

Explanation:

The journal entry is as follows

On Jan 31

Vacation pay expense Dr $8,900

        To vacation payable $8,900

(Being the vacation expense is recorded)

The computation is shown below:

= Estimated amount of the current year's vacation pay ÷ total number of months in a year

= $106,800 ÷ 12 months

= $8,900

For recording this transaction we debited the vacation expense as it increased the expenses while at the same time it also increased the liabilities so the vacation payable is credited

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