Question

On January 1, 2016, Yukon Company agreed to grant its employees two weeks vacation each year, with the provision that vacations earned in a particular year could be taken the following year. For the year ended December 31, 2016, all twelve of Yukon's employees earned $1,200 per week each. Eight of these vacation weeks were not taken during 2016. In Yukon's 2016 income statement, how much expense should be reported for compensated absences?

Answer 1

Answer:

The correct value is $9600.

Explanation:

As the complete question is not given, the complete question is attached herewith.

Since 8 vacation weeks were not taken during 2016 , Yukon's 2016 income statement should report  $9,600 ( 8 * $1,200) .

Journal Entry :

                                                                                  Debit          Credit

Salary expense                                                  $9,600

Liability – compensated future absences                         $9,600

( To record vacations earned but not taken)