Ayayai Company began operations on January 2, 2016. It employs 12 individuals who work 8-hour days and are paid hourly.
Ayayai Company began operations on January 2, 2016. It employs 12 individuals who work 8-hour days and are paid hourly. Each employee earns 11 paid vacation days and 7 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.
Actual hourly wage vacation days used by each employee Sick days used by each employee
2016 2017 2016 2017 2016 2017
$7 $8 0 10 5 6
Ayayai 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.
Prepare journal entries to record transactions related to compensated absences during 2016 and 2017
Date account titles and explanantion Debit Credit
2016
salaries and wages expense 7392
salaries and wages payable 7392
(To accrue the expense and liability for vacations)
salaries and wages expense 4704
salaries and wages payable 4704
(To accrue the expense and liability for sick pay)
salaries and wages payable 3360
cash 3360
(To record payment for compensated time when used by employees)
2017
salaries and wages expense 8448
salaries and wages payable 8448
(To accrue the expense and liability for vacations)
salaries and wages expense 5376
salaries and wages payable 5376
(To accrue the expense and liability for sick pay)
salaries and wages expense ?
salaries and wages payable ?
cash 7680
(To record vacation time paid)
salaries and wages expense ?
salaries and wages payable ?
cash 4608
(To record sick leave paid)
Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2016 and 2017.
2016 2017
vacation wages payable 7392 ?
sick pay wages payable 1344 ?
Can you please help me in understanding how to do the calculations to solve for the ? on vacation time paid, sick leave paid and the 2017 calculations to be reported on the balance sheet at December 31, 2017?
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