Accrued vacation pay

A business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year's vacation pay is $69,000.

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a. Journalize the adjusting entry required on January 31, the end of the first month of the current year, to record the accrued vacation pay. If an amount box does not require an entry, leave it blank.

blank	Account	Debit	Credit
blank	CashAccounts PayableSalaries PayableVacation Pay ExpenseVacation Pay Payable
	CashAccounts PayableSalaries ExpenseVacation Pay ExpenseVacation Pay Payable

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b. How is the vacation pay reported on the company's balance sheet?

As a current assetAs a current liabilityAs an expenseAs a long-term liability

, unless employees are allowed to accumulate their vacation pay for use in future years.

When is this amount removed from the company's balance sheet?

When the accounting period endsWhen employees are paidWhen employees take vacationsNever