Vacation Pay Liability

• Vacation pay is a cost to the company.

• The cost should be allocated over the entire year so that periods are not distorted.

Apr. 20 Vacation Pay Expense 600

Estimated Liability for

Vacation Pay 600

Estimated expense

Aug. 31 Estimated Liability for

Vacation Pay 1,000

Cash (or Wages Payable) 1,000

Wages of employees on vacation

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