Question

Marigold Company began operations on January 2, 2016. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 9 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 2016 2017 2016 2017 2016 2017 $11 $12 0 8 5 6 Marigold 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. Part 1 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)

Answer 1

Date	Account titles and explanation					Debit	Credit
2016	Salaries expense					8712
	Salaries payable						8712
	(11 employees*$11 rate/hour*8 hours/day*9 days)
	(To accrue the expense and liability for vacations)
	Salaries expense					6776
	Salaries payable						6776
	(11 employees*$11 rate/hour*8 hours/day*7 days)
	(To accrue the expense and liability for sick pay)
	Salaries payable					4840
	Cash						4840
	(11 employees*$11 rate/hour*8 hours/day*5 days)
	(To record payment for compensated time when used by employees)
2017	Salaries expense					9504
	Salaries payable						9504
	(11 employees*$12 rate/hour*8 hours/day*9 days)
	(To accrue the expense and liability for vacations)
	Salaries expense					7392
	Salaries payable						7392
	(11 employees*$12 rate/hour*8 hours/day*7 days)
	(To accrue the expense and liability for sick pay)
	Salaries expense				(8448-7744)	704
	Salaries payable					7744
	(11 employees*$11 rate/hour*8 hours/day*8 days)
	Cash						8448
	(11 employees*$12 rate/hour*8 hours/day*8 days)
	(To record payment for vacation)
	Salaries expense				(6336-6160)	176
	Salaries payable				(Note:1)	6160
	Cash						6336
	(11 employees*$12 rate/hour*8 hours/day*6 days)
	(To record payment for compensated time when used by employees)
	Note:1
	Year 2016:
						No.of days
	Sick leave days eligible					7
	Less: sick days used					5
	Balance					2
	This 2 days can be used in 2017 salaries payable
	Salaries payable to be debited:
						$
	(11 employees*$11 rate/hour*8 hours/day*2 days)					1936
	(11 employees*$12 rate/hour*8 hours/day*4 days)					4224
	(6 days used in 2017-2 days from 2016=4 days)
	Total					6160