Vacation Pay
Vacation pay presents cost problems similar to those of bonus payments. When an employee is entitled to a paid vacation of 2 weeks, the vacation pay is accrued over the 50 weeks of productive labor. For example, assume a direct laborer has a base wage of $300 per week. In 50 weeks at $12 per week, the deferred payment equals $600, the expected vacation pay. The entry to record the weekly labor cost,