Question

question stephen flynn works for island traders ltd. his annual salary is 80000 and he is paid weekly as part of his employment agrrement he is entitltled to 4 weeks annual leave each year. he recieves a leave loading of 17.5 percent B : provide the apporapriate journal entries assuming that stephen flynn takes two weeks annual leave after being employed for one year and assuming that the tax deducted from the 2 weeks payment is 1000 Part A (a) Cost of annual leave: $80 000  4/52  1.175 = $7,230.77 or $139 / week. Total amount paid to Stephen each year would be: $ For 48 weeks at normal pay rate: $80 000  48/52 = 73, 846 For 4 weeks inclusive of loading: $80 000  4/52  1.175 = 7,231 Total salary and annual leave 81,077 If Denton Ltd recognizes the annual leave obligation throughout the year, there would be the following entry each week: DR Annual leave expense 139 CR Provision for Annual Leave 139 (b) DR Provision for annual leave 3616 CR PAYG tax payable 1 000 CR Cash at bank 2 616 DR Annual leave expense 278 CR Provision for annual leave 278 i dont under stand part b

Answer 1

Stephen Flynn			$
Annual salary			80000
Weekly salary			1538
Leave salary (2 weeks)			3077
Leave loading (17.5%)			538
Total			3615
Tax deducted			1000
Net leave salary			2615
Journal entry
		Debit	Credit
Salaries		3615
TDS			1000
Cash			2615
(Leave salary paid to Stephen Flynn and tax deducted)
Part A (a)
Cost of annual leave		139	per week
Total amount paid to Stephen each year inclusive of loading
for 4 weeks		7231			80000	4	52	6154	1	7231
	Salaries	7231
	TDS		2000
	Bank		5231
	(4 weeks' salary including loading paid to Stephen
	and assumed TDS deducted)
	If Denton Ltd. recognizes annual leave obligation
	throughout the year:
	Provision for Annual Leave	3616
	PAYG tax payable		1000
	Bank		2616
	(Provision for Annual Leave)
	Annual Leave Expense	278
	Provision for Annual Leave		278
	(Actual Leave Expense for 2 weeks adjusted)