Accountant 1 (W): Larry, could you help me with these expense accounts?
Accountant 2 (M): Sure, Vicky. What’s up? 

Accountant 1: I need to know how to account for bonuses.

Accountant 2: You mean the bonuses we pay to executives and salespeople?
Accountant 1: Right. We don’t pay them until the end of the year, so how do I know how much they will be?

Accountant 2: Well, you don’t actually have to know. I can give you estimates.
Accountant 1: How do you estimate them? 

Accountant 2: I use the amounts of last year’s bonuses as a guide.

Accountant 1: Okay. That makes sense. But the amounts vary every year, right?
Accountant 2: They do. The estimates won’t be exactly accurate, but that’s not a problem. 

Accountant 1: So then, how do I record them? 

Accountant 2: You need to record them in the accrued expenses payable account.