Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $958,000 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:
Debit Unearned Bonuses $958,000; credit Bonus Payable $958,000.
No entry since the bonuses are not paid until January.
Debit Employee Bonus Expense $958,000; credit Prepaid Employee Bonus $958,000.
Debit Estimated Bonus Payable $958,000; credit Cash $958,000.
Debit Employee Bonus Expense $958,000; credit Bonus Payable $958,000