Question

For the year ended December 31, 2017, Lopez Company has implemented an employee bonus program

based on Lopez’s net income, which employees will share equally. Lopez’s bonus expense is computed as

$14,563.

1. Prepare the journal entry at December 31, 2017, to record the bonus due the employees.

2. Prepare the journal entry at January 19, 2018, to record payment of the bonus to employees.

Short answer

The bonus payable account is debited with $14,563, and the cash account is credited with $14,563.

Step-by-step solution

Definition of bonus

Bonus is a financial compensation that is different from the regular payment of the salaries.

Entry of accrued bonus

Date	Particulars	Debit	Credit
December 31, 2017	Employee Bonus Expense	$14,563
	Bonus Payable		$14,563
	(To record the accrued employee bonus)

This entry is passed on recording the accrued bonus of the employees due at the year-end.

Entry for the payment of the bonus

Date	Particulars	Debit	Credit
January 19, 2018	Bonus Payable	$14,563
	Cash		$14,563
	(To record the payment of bonus)

This entry is passed on recording the payment of the bonus to employees.