liabilites cont ch 3

liabilites cont ch 3 - III. Estimated liabilities A....

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III. Estimated liabilities A. Estimated liability: a known obligation that is of an uncertain amount but can be estimated B. Health and pension benefits 1. Medical life, disability, retirement 2. When payroll taxes and charges for employee benefits are totaled, payroll cost often exceeds employee gross earnings 3. Recording accrued benefits a) Debit employee benefit expense b) Credit employee medical insurance payable c) Credit employee retirement program payable C. Vacation benefits 1. Paid vacation benefits/ paid absences 2. Total annual salary is the same but cost per week worked is greater than amount paid per week 3. Example: employee is paid a total of 20,800 for 52 weeks but only works 50 weeks a) Difference in cost per week and amount paid per week: * Weekly expense to employer = 20,800/ 50 = $416 * Weekly salary to employee = 20,800/52 = $400 b) Accounting for difference * Debit vacation benefits expense for difference (16) * Credit vacation benefits expense payable for difference (16)
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liabilites cont ch 3 - III. Estimated liabilities A....

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