Question

Grace Ltd has 8 employees, who are each paid $500 per week for a 5 day working week. Each employee is entitled to 10 days accumulating non-vesting sick leave per year. At 1 July 2019 the accumulated untaken leave was 35 days in total. During the year ended 30 June 2020 a total of 45 days sick leave was taken, of which 10 days were unpaid leave. Of the accumulated untaken leave at 30 June 2020 it is estimated that 80% of it will be taken during the following year.

The balance of the provision for sick leave at 30 June 2020 is (rounded to the nearest dollar)

		$   640
		$5 760
		$6 400
		$8 000

Answer 1

Opening Balance in Leave Provision Account - $ 3500

Added Current year - $ 8000 (We do not use estimate because is cases where the leaves are to be taken in the next year same will be adjusted as below and for accumalated leaves the payment shall be done when the employee leaves. Hence we don't consider accounting for the estimate percentage.)

Paid Sick Leave taken - $ 3500 (35 Days x $100 = 3500 + 10 days are unpaid leaves = 45 Days of leave)

Balance - $ 8000

Answer: $ 8000 (D)