Question

BE13-7 (L01) Kasten Inc. provides paid vacations to its employees. At December 31, 2017, 30 employees have each earned 2 weeks of vacation time. The employees’ average salary is $500 per week. Prepare Kasten’s December 31, 2017, adjusting entry.

Short answer

The amount of vacation expenses is $30,000.

Step-by-step solution

Meaning of Average Salary

The amount of compensation typically received by the employee every month is known as the average salary. It is ascertained by dividing the total salary received by the number of months.

Journal Entry

Date	Accounts and Explanation	Debit $	Credit $
December 31, 2017	Vacation Expenses	$30,000
	Vacation Payable ($500 x 30 x 2)		$30,000
	(To record vacation payable)