Question

Crane Company began operations on January 2, 2019. It employs 11 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 Rate Vacation Days Used by Each Employee 2019 2020 0 10 Sick Days Used by Each Employee 2019 2020 5 6 2019 $8 2020 59 Crane 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 Your answer is partially correct. Prepare Journal entries to record transactions related to compensated absences during 2019 and 2020. (no entry is required, select "No Entry for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually) Debit Credit Date Account Titles and Explanation 5544 2019 Salaries and Wages Expense Salaries and Wages Payable (To accrue the expense and liability for vacations) Sales and Wates Expense Salaries and Wages Payabile (To accrue the expense and liability for sick pay) Salaries and Wages Payable 3520

Answer 1

Answer -

1. Answer -

Transactions	Date	Accounts titles and explanation	Debit	Credit
1	2019	Salaries and wages expense	$7744
		Salaries and wages payable		$7744
		(To accrue the expense and liability for vacations)
2		Salaries and wages expense	$4928
		Salaries and wages payable		$4928
		(To accrue the expense and liability for sick pay)
3		Salaries and wages payable	$3520
		Cash		$3520
		(To record payment for compensated time when used by employees)
4	2020	Salaries and wages expense	$8712
		Salaries and wages payable		$8712
		(To accrue the expense and liability for vacations)
5		Salaries and wages expense	$5544
		Salaries and wages payable		$5544
		(To accrue the expense and liability for sick pay)
6		Salaries and wages expense ($7920 - $7040)	$880
		Salaries and wages payable	$7040
		Cash		$7920
		(To record vacation time paid)
7		Salaries and wages expense ($4752 - $4576)	$176
		Salaries and wages payable	$4576
		Cash		$4752
		(To record sick leave paid)

Calculation:

Transaction 1:

= 11 employees * 8 hours * $8 per hour * 11 days

= $7744

Transaction 2:

= 11 employees * 8 hours * $8 per hour * 7 days

= $4928

Transaction 3:

= 11 employees * 8 hours * $8 per hour * 5 days

= $3520

Transaction 4:

= 11 employees * 8 hours * $9 per hour * 11 days

= $8712

Transaction 5:

= 11 employees * 8 hours * $9 per hour * 7 days

= $5544

Transaction 6:

Salaries and wages payable:

= 11 employees * 8 hours * $8 per hour * 10 days

= $7040

Cash:

= 11 employees * 8 hours * $9 per hour * 10 days

= $7920

Transaction 7:

Cash:

= 11 employees * 8 hours * $9 per hour * 6 days

= $4752

Salaries and wages payable:

In 2019 they earned 7 sick days, but only used 5 days in 2019. So there is 2 days left of sick days earned at the 2019

So,

= 11 employees * 8 hours * $8 per hour * (7 - 5) days

= $1408

In 2020, they used 6 days, which includes the 2 days earned from 2019

So,

= 11 employees * 8 hours * $9 per hour * (6 - 2) days

= $3168

Therefore,

Salaries and wages payable = $1408 + $3168 = $4576

2. Answer -

	2019	2020
Vacation wages payable	$7744	$9416
Sick pay wages payable	$1408	$2376

Calculation:

Vacation wages payable (2019):

Vacation wages payable
Jan. 02 balance	$0
Add: Accrued	$7744
Less: Paid	$0
Dec. 31 balance	$7744

Vacation wages payable (2020):

Vacation wages payable
Jan. 01 balance	$7744
Add: Accrued	$8712
Less: Paid	$7040
Dec. 31 balance	$9416

Sick pay wages payable (2019):

Sick pay wages payable
Jan. 02 balance	$0
Add: Accrued	$4928
Less: Paid	$3520
Dec. 31 balance	$1408

Sick pay wages payable (2020):

Sick pay wages payable
Jan. 01 balance	$1408
Add: Accrued	$5544
Less: Paid	$4576
Dec. 31 balance	$2376