ctual Hourly Wage Rate Vacation Days Used by Each Employee S

ctual Hourly
Wage Rate

Vacation Days Used
by Each Employee

Sick Days Used
by Each Employee

2016

2017

2016

2017

2016

2017

prepare journal entries to record transactions related to compensated absences during 2016 and 2017-Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2016 and 2017.

Sandhill Company began operations on January 2, 2016. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 9 paid vacation days and 6 paid sick days annually. Vacation days may be taken after January 15 of the year following the year in which they are earned. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows. ctual Hourly Wage Rate Vacation Days Used by Each Employee Sick Days Used by Each Employee 2016 2017 2016 2017 2016 2017 $10 $11 0 8 4 5 Sandhill Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and to accrue sick pay when earned

Solution

Answer

(1)Prepare journal entries to record transactions related to compensated absences during 2016

2016 To accure expense and liability for vacations

Salaries and wages expense 7920

Salaries and wages Payable 7920

2016 To accure expense and liability for sick pay

Salaries and wages expense 5280

Salaries and wages Payable 5280

2016 To record sick leave Paid

Salaries and wages Payable 3520

Account Title 3520

(2)Prepare journal entries to record transactions related to compensated absences during 2017

   2017 To accure expense and liability for vacations

Salaries and wages expense 8712

Salaries and wages Payable 8712

2017 To accure expense and liability for sick pay

Salaries and wages expense 5808

Salaries and wages Payable 5808

2017 To record vacation time paid

Salaries and Wages Expense 704

Salaries and wages Payable 7040

To Account Title A/C 7744   

2017 To record sick leave paid

Salaries and Wages Expense 176

Salaries and wages Payable 4664

To Account Title A/C 4840