4 Assume it is January 2018 and you are closing the books for the month as of 12

Question

4 Assume it is January 2018 and you are closing the books for the month as of 12/31/2017 on the accrual basis. The company's month end accrued vacation liability balances are pulled from the payroll system each month. The balances for November and December 2017 are shown below. What is the adjusting journal entry required to accrue the liability balance for the 12/31/2017 close? Business Unit Accrued Vacation as of 11/30/2017 Accrued Vacation as of 12/31/2017 Operations & Maintenance $ 206,392.70 $ 206,550.98 Energy Management         5,818.52         5,845.81 Service        47,635.90        45,689.20 Facilities      347,636.34      336,377.66 Administrative        25,839.29        24,386.84 Total $ 633,322.75 $ 618,850.49 4 Assume it is January 2018 and you are closing the books for the month as of 12/31/2017 on the accrual basis. The company's month end accrued vacation liability balances are pulled from the payroll system each month. The balances for November and December 2017 are shown below. What is the adjusting journal entry required to accrue the liability balance for the 12/31/2017 close? Business Unit Accrued Vacation as of 11/30/2017 Accrued Vacation as of 12/31/2017 Operations & Maintenance $ 206,392.70 $ 206,550.98 Energy Management         5,818.52         5,845.81 Service        47,635.90        45,689.20 Facilities      347,636.34      336,377.66 Administrative        25,839.29        24,386.84 Total $ 633,322.75 $ 618,850.49

Explanation / Answer

Since the total accrued vacation liability has been reduced from $633,322.75 to $618,850.49, it means that the employees have taken the leaves and they are being paid for that. In such cases, we need to record the difference as credit to leave expenses and reduce the accrued vacation liability. Therefore, following adjusting journal is required:

Date

Particulars

Amount ($)

Amount ($)

December 31, 2017

Accrued vacation A/c – Dr

               To, Leave expense A/c

14,472.26

14,472.26

Above journal is passed, assuming that the leave expenses account is already debited by same amount at the time of payments of salaries. If not, the same journal will be as follows:

Date

Particulars

Amount ($)

Amount ($)

December 31, 2017

Accrued vacation A/c – Dr

               To, Cash A/c

14,472.26

14,472.26

Please provide your valueable feedback if the answer is helpful.

Date

Particulars

Amount ($)

Amount ($)

December 31, 2017

Accrued vacation A/c – Dr

               To, Leave expense A/c

14,472.26

14,472.26

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