Question

Employees earn vacation pay at the rate of one day per month.During the month of June, 10 employees qualify for one vacation dayeach. Their average daily wage is $150 per day. Which of thefollowing is the necessary adjusting journal entry to record theJune vacation benefits?

Debit Vacation Benefits Expense $1,500; credit Prepaid VacationBenefits $1,500.

Debit Vacation Benefits Expense $1,500; credit Vacation BenefitsPayable $1,500.

Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable$1,500.

Debit Prepaid Vacation Benefits $1,500; credit Vacation BenefitsPayable $1,500.

Debit Vacation Benefits Payable; credit Vacation BenefitsExpense $1,500.