Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $965,000 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:
A. Debit Employee Bonus Expense $965,000; credit Bonus Payable $965,000.
B. Debit Unearned Bonuses $965,000; credit Bonus Payable $965,000.
C. Debit Estimated Bonus Payable $965,000; credit Cash $965,000.
D. Debit Employee Bonus Expense $965,000; credit Prepaid Employee Bonus $965,000.
E. No entry since the bonuses are not paid until January.
Answer: A
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