On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar Fabricators' employees each earned an average of $800 per week Nine hundred vacation weeks earned in 2024 were not taken during 2024 Required: 1. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. 2. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 5 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $31 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the
stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar
Fabricators' employees each earned an average of $800 per week Nine hundred vacation weeks earned in 2024 were not taken
during 2024
Required:
1. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024.
2. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 5 percent
from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $31 million.
Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025.
Transcribed Image Text:On January 1, 2024, Poplar Fabricators Corporation agreed to grant its employees two weeks of vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2024, Poplar Fabricators' employees each earned an average of $800 per week Nine hundred vacation weeks earned in 2024 were not taken during 2024 Required: 1. Prepare the appropriate adjusting entry for vacations earned but not taken in 2024. 2. Suppose that, by the time vacations actually are taken in 2025, salary rates for employees have risen by an average of 5 percent from their 2024 level. Also, assume salaries earned in 2025 (including vacations earned and taken in 2025) were $31 million. Prepare a journal entry that summarizes 2025 salaries and the payment for 2024 vacations taken in 2025.
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