For the year ended December 31, 2009, Kava Company has implemented an employee bonus program equal to 4% of Kava’s net income, which employees will share equally. Kava’s net income (pre bonus) is expected to be $1,300,000, and bonus expense is deducted in computing net income.

1. Compute the amount of the bonus payable to the employees at year-end (use the method described in the chapter and round to the nearest dollar).

2. Prepare the journal entry at December 31, 2009, to record the bonus due the employees.

3. Prepare the journal entry at January 19, 2010, to record payment of the bonus to employees.