Accrued Vacation Pay – Ford Online Accounting Manual

Liabilities and Net Worth

ACCRUED VACATION PAY	LIABILITY ACCOUNT
	2412

Estimated gross amount of vacation pay earned by non-salaried employees, such as technicians and vehicle salespeople.

			Jrnl.	Dr.	Cr.

Monthly accrual of estimated vacation pay			SE
	Salaries—Salespeople—New			7070
	Salaries—Salespeople—Used			7270
		Vacation & Time-Off Pay—Technicians (Parts)			7695
	Vacation & Time-Off Pay—Technicians (Service)			7790
	Vacation & Time-Off Pay—Technicians (Body Shop)			7890
		Accrued Vacation Pay			2412

Reversal of accrual in month of actual payment			G
	Accrued Vacation Pay			2412
		Salaries—Salespeople—New			7070
		Salaries—Salespeople—Used			7270
		Vacation & Time-Off Pay—Technicians (Parts)			7695
		Vacation & Time-Off Pay—Technicians (Service)			7790
		Vacation & Time-Off Pay—Technicians (Body Shop)			7890

Accruals should be based on the dealership’s vacation policy, terms of contract, or other agreements with employees.
In the month of payment, vacation pay should be charged to Account 7070, Salaries—Salespeople—New, Account 7270, Salaries—Salespeople—Used, Account 7695, Vacation & Time-Off Pay—Technicians (Parts), Account 7790, Vacation & Time-Off Pay—Technicians (Service), Account 7890, Vacation & Time-Off Pay—Technicians (Body Shop), and credited to Account 2410, Accrued Payroll, in the Payroll Journal.
Since special handling of this account may be required for income tax purposes, dealers should consult tax counsel as necessary.