In: Accounting
Sheridan Company began operations on January 2, 2016. It
employs 8 individuals who work 8-hour days and are paid
hourly. Each employee earns 10 paid vacation days
and 8 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 |
||||||||||
2016 |
2017 |
2016 |
2017 |
2016 |
2017 |
|||||||
$ 8 | $ 9 | 0 | 9 | 6 | 7 |
Sheridan 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 2016 and 2017. (If no entry
is required, select "No Entry" for the account titles and enter 0
for the amounts. Credit account titles are automatically indented
when amount is entered. Do not indent
manually.)
Date |
Account Titles and Explanation |
Debit |
Credit |
||||||||||||||
2016 |
|||||||||||||||||
(To accrue the expense and liability for vacations) |
|||||||||||||||||
(To accrue the expense and liability for sick pay) |
|||||||||||||||||
(To record payment for compensated time when used by employees) |
|||||||||||||||||
2017 |
|||||||||||||||||
(To accrue the expense and liability for vacations) |
|||||||||||||||||
(To accrue the expense and liability for sick pay) |
|||||||||||||||||
(To record vacation time paid) |
|||||||||||||||||
(To record sick leave paid) Compute the amounts of any liability for compensated absences
that should be reported on the balance sheet at December 31, 2016
and 2017.
|
For example, (10*8*12*12) it means 10 employee, 8 hours, $12 wages rate per hour*12 days |
|||
Journal entries |
|||
Date |
General journal |
Debit |
Credit |
2016 |
Salaries and wages expense (8*8*8*10) |
5,120 |
|
Salaries and wages payable |
5,120 |
||
(To record expense and liabilities for vacation.) |
|||
2016 |
Salaries and wages expense (8*8*8*8) |
4,096 |
|
Salaries and wages payable |
4,096 |
||
(To record expense and liabilities for sick leave.) |
|||
2016 |
Salaries and wages payable (8*8*8*6) |
3,072 |
|
Cash |
3,072 |
||
(To record Sick leave paid.) |
|||
2017 |
Salaries and wages expense (8*8*9*10) |
5,760 |
|
Salaries and wages payable |
5,760 |
||
(To record expense and liabilities for vacation.) |
|||
2017 |
Salaries and wages expense (8*8*9*8) |
4608 |
|
Salaries and wages payable |
4,608 |
||
(To record expense and liabilities for sick leave.) |
|||
2017 |
Salaries and wages expense (5184-4608) |
576 |
|
Salaries and wages payable (8*8*8*9) |
4,608 |
||
Cash (8*8*9*9) |
5,184 |
||
(To record vacation time paid.) |
|||
2017 |
Salaries and wages expense |
128 |
|
Salaries and wages payable (out of 7 sick leave, 2 leave from 2016 (8 -6 used in 2016) and remaining (7-2 from 2016) 5 from 2017 ((8*8*8*2)+(8*8*9*5)) |
3,904 |
||
Cash (8*8*9*7) |
4,032 |
||
(To record sick leave paid.) |
2016 |
Vacation leave |
Sick leave |
Beginning of year |
- |
- |
Add : accrued |
5,120 |
4,096 |
Less: paid |
- |
(3,072) |
End of the year |
5,120 |
1,024 |
2017 |
||
Beginning of year |
5,120 |
1,024 |
Add : accrued |
5,760 |
4,608 |
Less: paid |
(4,608) |
(3,904) |
End of the year |
6,272 |
1,728 |
2016 |
2017 |
|
Vacation Wages Payable |
5,120 |
6,272 |
Sick Pay Wages Payable |
1,024 |
1,728 |