Question

Apple inc. allows each employee to earn 15 fully paid vacation days each year. unused vacation time can be carried over to next year, if no taken during the next year then its lost. vacation pay is accrued at the pay rate in effect during the year it is earned.

by the end of 20X8, all but 3 of 20 employees had taken their earned vacation time, these 3 employees carried over to 20X9 a total of 20 vacation days. these 20 days represented total 20X8 salary of $5000. during 20X9, these 3 employees used their 20X8 vacation carryover in 20X9, a pay rate change was effective January 1 20X9 - Total cash wages paid (not including vacation pay). In 20X8 $1 490 000, 20X9 its 20X9 $1 564 500. by the end of 20X9 all 2 employees had taken all vacation entitlement.

required:

1) prepare journal entries for apple inc relating to vacations during 20X8 and 20X9. disregard payroll taxes

2) compute total amount of wage expense for 20X8 and 20X9 (inclusive of vacation)

3) how would the vacation time carried over from 20X8 affect the 20X8 statement of financial position

Answer 1

(1) Journal entries for apple ina selating to vacation 20x8 Vacation expense or $5000 5000 To Vacation liability 20x9 Vacation To liability to Cash $5000 $5000 (2) 2008 Total Wage - Cash expense. wages paid $1490000 -$5000 H) Vacation pay $1495000 gox9 Cash wages paid $1564500 13) Vacation time carried one will create liability on the statement of financual position cut year end 2018 that is the vacation time is used by the employee, a payment needs to be made for the same