Sunland Company began operations on January 2, 2019. It employs
12 individuals who work 8-hour days and are paid hourly. Each
employee earns 11 paid vacation days and 8 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 |
Vacation Days Used |
Sick Days Used |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
|||||||
$8 | $9 | 0 | 10 | 6 | 7 |
Sunland 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 2019 and 2020. (If no entry
is required, select "No Entry" for the account titles and enter 0
for the amounts. Credit account titles are automatically indented
when amount is entered. Do not indent
manually.)
Date |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|
2019 |
Salaries and Wages Expense | 8448 | |
Salaries and Wages Payable |
8448 | ||
(To accrue the expense and liability for vacations) |
|||
Salaries and Wages Expense |
? | ||
Salaries and Wages payable |
? | ||
(To accrue the expense and liability for sick pay) |
|||
Salaries and Wages Payable |
4608 |
||
Cash |
4608 | ||
(To record payment for compensated time when used by employees) |
|||
2020 |
Salaries and Wages Expense |
? | |
Salaries and Wages Payable |
? | ||
(To accrue the expense and liability for vacations) |
|||
Salaries and Wages Expense |
? | ||
Salaries and Wages Payable |
? | ||
(To accrue the expense and liability for sick pay) |
|||
Salaries and Wages Expense |
960 | ||
? |
? | ||
Cash |
? | ||
(To record vacation time paid) |
|||
Salaries and Wages Expense |
? | ||
? |
? | ||
Cash |
? | ||
(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, 2019
and 2020.
2019 |
2020 |
|||
---|---|---|---|---|
Vacation Wages Payable |
8448 | ? | ||
Sick Pay Wages Payable |
4536 | ? |
Part A
Date |
Account titles and explanation |
Debit |
Credit |
2016 |
Salaries and wages expense |
8448 |
|
Salaries and wages payable (12 employees X $8.00/hr. X 8 hrs./day X 11 days) |
8448 |
||
(to accrue the expense and liability for vacation) |
|||
Salaries and wages expense (12 employees X $8.00/hr. X 8 hrs./day X 8 days) |
6144 |
||
Salaries and wages payable |
6144 |
||
(to accrue the expense and liability for sick pay) |
|||
Salaries and Wages Payable |
4608 |
||
Cash (12 employees X $8.00/hr. X 8 hrs./day X 6 days) |
4608 |
||
2017 |
Salaries and wages expense (12 employees X $9.00/hr. X 8 hrs./day X 11 days) |
9504 |
|
Salaries and wages payable |
9504 |
||
(to accrue the expense and liability for vacation) |
|||
Salaries and wages expense |
6912 |
||
Salaries and wages payable (12 employees X $9.00/hr. X 8 hrs./day X 8 days) |
6912 |
||
(to accrue the expense and liability for sick pay) |
|||
Salaries and wages expense (balancing figure) |
960 |
||
Salaries and wages payable (12 employees X $8.00/hr. X 8 hrs./day X 10 days) |
7680 |
||
Cash (12 employees X $9.00/hr. X 8 hrs./day X 10 days) |
8640 |
||
(to record vacation time period)) |
|||
Salaries and Wages Expense (12 employees X ($8-7) /hr. X 8 hrs./day X (8-6) last yr) |
192 |
||
Salaries and Wages Payable (12 employees X $8.00/hr. X 8 hrs./day X (8-6) days) + (12 employees X $9.00/hr. X 8 hrs./day X (7-2) days) |
5856 |
||
Cash (12 employees X $9.00/hr. X 8 hrs./day X 7 days) |
6048 |
||
(to record sick leave paid) |
Part B
2016 |
2017 |
|
Vacation wages payable |
7392 |
9120 |
Sick pay wages payable |
1344 |
2304 |
2016 |
2017 |
|||
Vacation wages payable |
Sick pay wages payable |
Vacation wages payable |
Sick pay wages payable |
|
Jan 1. Balance |
0 |
0 |
8448 |
1536 |
Plus accrued |
8448 |
6144 |
9504 |
6912 |
Less paid |
0 |
(4608) |
(7680) |
(5856) |
Dec. 31 balance |
$8448 |
$1536 |
$10272 |
$2592 |
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