Answer :
Vacation pay expense $42,000
Vacation pay payable $42,000
How is the vacation pay registered on the company's balance sheet?
It is recorded on the company's balance sheet as the accrued liability at the drawbacks portion.
When is this amount withdrawn from the company's balance sheet?
The amount will be removed once the vacation pay is paid and debited to the income account.
The balance sheet is an significant tool used by executives, investors, analysts, and regulators to know the current financial health of a business. It is usually used alongside the two other types of financial statements: the income statement and the cash flow statement.
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