Question

Exercise 13-11 Marigold Limited began operations on January 2, 2016. The company employs 15 individuals who work 8-hour days and are paid hourly. Each employee earns 10 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: Vacation Days Used by Each Employee Actual Hourly Sick Days Used Wage Rate 2016 2017 2016 $21 $230 Each Employee 2017 2016 2017 4 Marigold Limited has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when they are earned and to accrue sick pay when it is earned. For the purpose of this question, ignore any tax, CPP, and EI deductions when making payments to the employees.

Answer 1

Hey there !

I am mentioning some important concepts so that you can understand the solution properly

1.Expense for vacation and sick days is to be recorded at full amount for each year.

2. Provision for vacation and Provision for sick days is a liability account to be used in next year.

3. While making payment in 2017 for sick days, Provision for sick days of 2016 $5040 is used.Remaining compensation is recorded for $8280.