Mathewson Company began operations on January 2, 2010. It employs 10 individuals
ID: 2442349 • Letter: M
Question
Mathewson Company began operations on January 2, 2010. It employs 10 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 Vacation Days Used Sick Days Used
Wage Rate
by Each Employee
by Each Employee
2010 2011 2010 2011 2010 2011
$12.80 $13.80 0 9 4 5
Mathewson 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.
(a) Prepare journal entries to record transactions related to compensated absences during 2010 and 2011. (For multiple debit/credit entries, list amounts from largest to smallest, e.g. 10, 8, 6.)
Date Description/Account Debit Credit
2010 Wages expense
Vacation wages payableCashSick pay wages payableWages expense
Vacation wages payableSick pay wages payableWages expenseCash
(To accrue expense and liability for compensated absences.)
2011 Wages expense
Vacation wages payable
Sick pay wages payable
(To accrue expense and liability for compensated absences.)
2010 CashSick pay wages payableWages expenseVacation wages payable 4096
Cash 4096
(To record payment for compensated time when used by employees.)
2011 Vacation wages payable
Sick pay wages payable
Wages expenseSick pay wages payableCashVacation wages payable
Vacation wages payableSick pay wages payableCashWages expense 15456
(To record payment for compensated time when used by employees.)
(b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2010 and 2010.
Vacation Wages Payable-2010 $
Sick Pay Wages Payable-2010 $
Vacation Wages Payable-2011 $
Sick Pay Wages Payable-2011 $