For the Year Ended December 31,2013,Mason Company Has Implemented an Employee

question 72

Multiple Choice

For the year ended December 31,2013,Mason Company has implemented an employee bonus program equal to 7% of Mason's net income,which employees will share equally.Mason's net income (pre-bonus) is expected to be $3,500,000,and bonus expense is deducted in computing net income.What is the amount that needs to be recorded for estimated bonus liability for 2013?

• A)$245,000
• B)$144,118
• C)$228,972
• D)$50,000
• E)$125,000

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Definitions:

Remuneration Expense

The total cost incurred by an organization for the payment of salaries, wages, and other forms of employee compensation.

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Share Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of a company at a predetermined price within a specific timeframe.

Remuneration Expense

The total cost incurred by an organization for paying salaries, wages, bonuses, and other benefits to its employees.