Question
At the beginning of 20x1, a company announced a sabbatical plan for senior executives. After 9 years of consecutive service, those eligible will be allowed
At the beginning of 20x1, a company announced a sabbatical plan for senior executives. After 9 years of consecutive service, those eligible will be allowed 3 months off at 90% of their salary. Three executives currently earning $250,000 each (measured at the end of 20x1) are eligible for the sabbatical plan. It is expected that two will earn the sabbatical leave (the other is expected to leave the company before the 9 years service requirement). Salary increases are expected to average 3% per year (i.e. their salary for 20x2 will be $250,000 x 1.03 = 257,500). No entries were made for this plan yet. Any service component of the sabbatical plan should be debited to administrative expenses. Required Assuming the yield on high quality corporate bonds is 4%, prepare the journal entry related to this sabbatical plan at December 31, 20x1.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started