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Annually, Monet Corp. awards each of its employees two weeks of paid vacation, which can be...

Annually, Monet Corp. awards each of its employees two weeks of paid vacation, which can be carried over if not used. As of December 31, Year 1, the company determined that there are 20 vacation weeks eligible for carryover. During Year 1, compensation averaged $1,000 per week. That average compensation amount is expected to increase to $1,030 during Year 2 when that vacation time will be taken. What is the liability that should be reported for vacation pay in the company’s balance sheet prepared as of December 31, Year 1?

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Answer #1

1030*20weeks=$20600

vacation pay liability will be calculated on the increased average compensation amount.

The employees will be pais at the most recent rates.

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> Answer:
The liability for paid absences usually is accrued at the existing wage rate rather than at a rate estimated to be in effect when the absences occur.

20 carryover weeks × Average compensation during Year 1 of $1,000 per week = $20,000

Giao Dinh Sun, Oct 31, 2021 1:01 PM

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