Springfield Company offers a bonus plan to its employees and the amount of the e

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 $970,000 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is: Multiple Choice No entry since the bonuses are not paid until January. 900 00 Debit Unearned Bonuses $970,000; credit Bonus Payable Debit Estimated Bonus Payable $970,000; credit Cash $970,000 0 Debit Employee Bonus Expense $970,000; credit Prepaid Employee Bonus $970,000.

Explanation / Answer

Estimated Current year Bonus : $970000

Date

Particulars

Debit

Credit

31 Dec

Employee Bonus Expense A/c

$970000

       To Bonus Payable A/c

$970000

Being employee bonus expense for the year payable next year.

Date

Particulars

Debit

Credit

31 Dec

Employee Bonus Expense A/c

$970000

       To Bonus Payable A/c

$970000

Being employee bonus expense for the year payable next year.

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