Matt Broderick Company began operations on January 2, 2013. It employs 9 individ
ID: 2329014 • Letter: M
Question
Matt Broderick Company began operations on January 2, 2013. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 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 2016 2017 Vacation days used by each employee 2016 2017 Sick days used by each employee 2016 2017
$10 $11 0 9 4 5
(a)Prepare journal entries to record transactions related to compensated absences during 2016 and 2017.
(b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2016, and 2017. Please explain each step with each calculation
Explanation / Answer
Part 1
Part B
Vacation wages payable 2016......7200
Sick wages payable 2016.............1440 (4320-2880)
Vacation wages payable 2017.....8640 (7200+7920-6480)
Sick wages payable 2017........... 2376 (1440+4752-3816)
Date account titles and explanation debit credit 2016 Salaries and wages expense 7200 Salaries and wages payable (9 employees *8hours*10days*$10) 7200 (To accrue the expense and liability for vacations) 2016 Salaries and wages expense 4320 Salaries and wages payable (9 employees * 8 hours * 6 days * $10) 4320 (To accrue the expense and liability for sick pay) 2016 Salaries and wages payable 2880 Cash (9 employees * 8 hours * 4 days *$10) 2880 (To record sick leave paid) 2017 Salaries and wages expense 7920 Salaries and wages payable (9 employees * 8 hours * 10 days * $11) 7920 (To accrue the expense and liability for vacations) 2017 Salaries and wages expense 4752 Salaries and wages payable (9 employees *8 hours * 6 days* $11) 4752 (To accrue the expense and liability for sick pay) 2017 Salaries and wages expense (7128-6480) 648 Salaries and wages payable (9 employees * 8hours*9 days *$10) 6480 Cash (9 employees * 8 hours * 9 days * $11) 7128 (To record vacation time paid) 2017 Salaries and wages expense (3960-3816) 144 Salaries and wages payable (9*8*11*3)+(9*8*10*2) 3816 Cash (9 employees * 8 hours * $11 * 5 days) 3960 (To record payment for compensated time when used by employees)