Matt Broderick Company began operations on January 2, 2013. It employs 10 indivi
ID: 2486586 • Letter: M
Question
Matt Broderick Company began operations on January 2, 2013. It employs 10 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 7 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
Vacation Days Used
by Each Employee
Sick Days Used
by Each Employee
2013
2014
2013
2014
2013
2014
Matt Broderick 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 2013 and 2014
Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2013 and 2014.
Actual Hourly
Wage Rate
Vacation Days Used
by Each Employee
Sick Days Used
by Each Employee
2013
2014
2013
2014
2013
2014
$18 $19 0 9 5 6Explanation / Answer
1 Cost of vacation pay for 2013
10 employees * 18per hr * 8 hrs per day * 10 days = $10,080
Entry Wages expense $10,080
Vacation wages payable $ 10,080
(2) Cost of sick pay for 2014
10employees * $18 per hr * 8 hrs per day * 5 days = $8,064
Wages expense $8,064
Wages payable $8,064
(3) sick leave paid
10 people * $18 * 8 hrs per day * 5 days = $6,048
Sick wages payable $6,048
To Cash $6,048
2014
(1) Acrue expense for vacation
cost = 10 * $19 * 8* 10days = $10,800
Wages expense $ 10,800
To vacation wages paybale $10,800
(2) sick wages accrued
10*$19*8*8 = $8,640
Wages expense $8,640
to Sick wages payable $8,640
Total cash spending for vacation and sick days
= 10 employees * $19 * 8 hrs per day *9 days = $9720
= 10 people *$19 * 8 hrs per day * 6days = $7560
total = $ 17,280
How much amount is debited in sicks wages payable
9 emp * $14 * 8 hr per day * (8-6= 2 days )= $2016
emp *15 * 8 hrs 9 per day * ( 7-2=5days) = $5400
7 days in total 2 from last and5 from this yr= $7416
Vacations payable get debited by
9 employees * $14 *8*9= $9072 all from last yr
Wage expense get debited by
sick pay = 9 *($15-$14) *8*2 = $144
Vac = 9*1*8*9 = 648
total = $792
Wages exp $792
sick wages payable $7416
vaction wages payable $9072
to cash $ 17,280