On December 31, Lazo Co. offers a bonus to its employees of $100,000 to be paid in January of the following year. The December 31 journal entry will require a credit to the
Blank
______ account in the amount of
Blank
______.

Question

On December 31, Lazo Co. offers a bonus to its employees of $100,000 to be paid in January of the following year. The December 31 journal entry will require a credit to the 
Blank
______ account in the amount of 
Blank
______.

BlackTom AI · Accepted Answer

Accrual accounting recognizes expenses when incurred, so a bonus promised on December 31 but payable in January must be recorded as an expense in December and a liability at year-end.

1) Relevant knowledge points and concepts
- Matching principle: record expenses in the period they are incurred, regardless of cash payment timing. 
- Adjusting entry for accrued liabilities: when an obligation exists at period end but will be paid later, debit an expense and credit a payable (liability). 
- Credit increases liability accounts; debit increases expense accounts.

2) Step-by-step reasoning and journal entry
- On December 31 the company has incurred the expense of $100,000 (employees earned the bonus). The company is obligated to pay in January, so a liability must be recorded today.
- Record the adjusting journal entry: Debit Bonus Expense (or Salaries Expense category) for $100,000 to show the expense in December; Credit Bonus Payable for $100,000 to show the obligation on the balance sheet.
- The specific credit asked in the question is therefore the payable account for the bonus in the amount of $100,000.

3) Intermediate steps and amounts
- Debit: Bonus Expense (or Salaries and Wages Expense if using that classification) — $100,000
- Credit: Bonus Payable — $100,000

4) Why the correct answer is correct
- “Bonus Payable; $100,000” is correct because the credit side of the adjusting entry must be a liability account that reflects the unpaid obligation at year-end; Bonus Payable increases with a credit and shows the amount due in January.

5) Why other options are incorrect
- “Bonus Expense; $100,000”: An expense would be debited, not credited. Crediting an expense would reduce it, which is incorrect here. 
- “Cash; $100,000”: Cash should be credited only when payment is made. Since payment occurs in January, cash is not affected on Dec 31. 
- “Salaries and Wages Expense; $100,000”: Like Bonus Expense, Salaries and Wages Expense would be debited if used; it is not the correct account to credit.

Conclusion: The appropriate credit on December 31 is Bonus Payable for $100,000, matching the provided answer: Bonus Payable; $100,000.

On December 31, Lazo Co. offers a bonus to its employees of $100,000 to be paid in January of the following year. The December 31 journal entry will require a credit to the Blank account in the amount of Blank .Single choice

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On December 31, Lazo Co. offers a bonus to its employees of $100,000 to be paid in January of the following year. The December 31 journal entry will require a credit to the Blank ______ account in the amount of Blank ______.Single choice