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Vander Co. provides medical care and insurance benefits to its retirees. In the current year, Vander agrees to pay $9,500 for medical insurance and contribute an additional 5% of the employees’ $200,000 gross salaries to a retirement program.
(1) Record the entry for these accrued (but unpaid) benefits on December 31.
(2) Assuming $5,000 of the retirement benefits are not to be paid for five years, how should this amount be reported on the current balance sheet?

Respuesta :

jepessoa

,Answer:

December 31, 202x, accrued medical insurance

Dr Medical care and insurance expense 9,500

    Cr Medical care and insurance payable 9,500

December 31, 202x, accrued contribution to retirement program

Dr Retirement program expense 10,000

    Cr Retirement program payable 10,000

Retirement program expense = $200,000 x 5% = $10,000

Journal entries;

Particular                                                    Debit         Credit

Medical Insurance Exp         Dr.              $9,500

Ret. Program Exp                  Dr.              $10,000

To Accrued Emp. Benefits                                         $19,500

 

Retirement Program exp = Gross Salary X Percent of contribution = Retirement Program exp = $2,00,000 X 5%

Retirement Program exp = $10,000

"Non-Current Liabilities" requirements The obligation is non-current in nature because it is not due relatively soon, hence it is shown under Non-Current Liabilities.

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