Multiple Choice Question

Abby Co$.$ allows each employee two weeks of paid time off during each calendar year. Since employees are working for $50$ weeks, rather than $52$ weeks, Abby must accrue the paid time off during the $50$ weeks that the employees work. The year$-$end adjusting entry is recorded as a credit to the $$ account.

Employee Taxes Payable

Employee Wages Payable

Vacation Benefits Payable

Select all that apply

Which of the following contingent liabilities would require a company to record a note to the financial statements?

The liability is remote and cannot be estimated.

The liability is possible and cannot be reasonably estimated.

The liability is possible and is estimated to be $$35,000.$

The liability is remote and estimated to be $$15,000.$

The liability is probable and cannot be reasonably estimated.

The liability is probable and estimated to be $$40,000.$