Question

Wildhorse Company began operations on January 2, 2016. It employs 12 individuals who work 8-hour days and are paid hourly. Each employee earns 11 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 $7 $8 0 10 5 6 Wildhorse 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.) 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.) 2-Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2016 and 2017.

Answer 1

Part A

Date	Account titles and explanation	Debit	Credit
2016	Salaries and wages expense	7392
	Salaries and wages payable (12 employees X $7.00/hr. X 8 hrs./day X 11 days)		7392
	(to accrue the expense and liability for vacation)
	Salaries and wages expense (12 employees X $7.00/hr. X 8 hrs./day X 7 days)	4704
	Salaries and wages payable		4704
	(to accrue the expense and liability for sick pay)
	Salaries and Wages Payable	3360
	Cash (12 employees X $7.00/hr. X 8 hrs./day X 5 days)		3360
2017	Salaries and wages expense (12 employees X $8.00/hr. X 8 hrs./day X 11 days)	8448
	Salaries and wages payable		8448
	(to accrue the expense and liability for vacation)
	Salaries and wages expense	5376
	Salaries and wages payable (12 employees X $7.00/hr. X 8 hrs./day X 7 days)		5376
	(to accrue the expense and liability for sick pay)
	Salaries and wages expense (balancing figure)	960
	Salaries and wages payable (12 employees X $8.00/hr. X 8 hrs./day X 10 days)	6720
	Cash (12 employees X $8.00/hr. X 8 hrs./day X 10 days)		7680
	(to record vacation time period))
	Salaries and Wages Expense (12 employees X ($8-7) /hr. X 8 hrs./day X (7-5) last yr)	192
	Salaries and Wages Payable (12 employees X $7.00/hr. X 8 hrs./day X (7-5) days) + (12 employees X $8.00/hr. X 8 hrs./day X (6-2) days)	4416
	Cash (12 employees X $8.00/hr. X 8 hrs./day X 6 days)		4608
	(to record sick leave paid)

Part B

	2016	2017
Vacation wages payable	7392	9120
Sick pay wages payable	1344	2304

	2016		2017
	Vacation wages payable	Sick pay wages payable	Vacation wages payable	Sick pay wages payable
Jan 1. Balance	0	0	7392	1344
Plus accrued	7392	4704	8448	5376
Less paid	0	(3360)	(6720)	(4416)
Dec. 31 balance	7392	1344	9120	2304