Springfield Company Offers a Bonus Plan to Its Employees and the Amount

Multiple Choice

Springfield Company offers a bonus plan to its employees and the amount of the employee bonuses for the current year is estimated to be $32,500 to be paid during January of the following year. The journal entry on December 31 to record the bonuses is:

A) Debit Unearned Bonuses $32,500; credit Bonus Payable $32,500.
B) No entry since the bonuses are not paid until January.
C) Debit Employee Bonus Expense $32,500; credit Prepaid Employee Bonus $32,500.
D) Debit Estimated Bonus Payable $32,500; credit Cash $32,500.
E) Debit Employee Bonus Expense $32,500; credit Bonus Payable $32,500.