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Sunland Co. began operations on January 2, 2020. It employs 17 people who work 8-hour days....

Sunland Co. began operations on January 2, 2020. It employs 17 people who work 8-hour days. Each employee earns 10 paid vacation days annually. Vacation days may be taken after January 10 of the year following the year in which they are earned. The average hourly wage rate was $20 in 2020 and $21.75 in 2021. The average vacation days used by each employee in 2021 was 9. Sunland Co. accrues the cost of compensated absences at rates of pay in effect when earned.

Prepare journal entries to record the transactions related to paid vacation days during 2020 and 2021

Solutions

Expert Solution

Given Number of Employees=17 people

Employees Salary=10 vacation day annually

Number of Hours= 8Hours

So average hourly wage rate in  2020= $20

So average hourly wage rate in  2021= $21.75

The average vacation days used by each employee in 2021 was 9.days

Following is the Journal Entries  related to paid vacation days during 2020 and 2021

Date Account Title Debit($) Credit($)
2020 Wages Expenses $27,200
Vacation Wages Payable $27200
(17 people*8 hours*10days*20)
(Recording of the vacation wages in 2020)
2021 Wages Expenses $2,142
Vacation Wages Payable (17people*8hours*9days*$20) $24,480
Cash(17 people*8 hours*9 days*21.75) $26,622
(Being cash paid for vacation wages)
2021 Wages Expenses $29,580
Vacation Wages Payable $29,580
(17 people*8hours*10days*21.75)
(Recording of vacation wages due in 2021)

ekkarill92 answered 2 years ago
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