Question

Blossom Company began operations on January 2, 2019. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 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
2019			2020			2019		2020		2019		2020
$10			$11			0		9		4		5

Blossom Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates of pay without discounting. The company used the following projected rates to accrue vacation time.

Year in Which Vacation Time Was Earned		Projected Future Pay Rates Used to Accrue Vacation Pay
2019		$10.97
2020		11.83

(a)Prepare journal entries to record transactions related to compensated absences during 2019 and 2020. (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. Round answers to 0 decimal places, e.g. 5,125.)

Answer 1

a) Journal entries to record transactions related to compensated absences during 2019.
Account Titles and Explanation	Debit	Credit
Salaries and Wages Expense (9 employees X $10.97/hr. X 8 hrs./day X 10 days)	$ 7,898.40
Salaries and Wages Payable		$ 7,898.40
To accrue the expense and liability for vacations
Salaries and Wages Expense (9 employees X $10.00/hr. X 8 hrs./day X 4 days)	$ 2,880.00
Cash		$ 2,880.00
To record sick leave paid
No Entry, since no vacation days were used
To record vacation time paid
Journal entries to record transactions related to compensated absences during 2020.
Account Titles and Explanation	Debit	Credit
Salaries and Wages Expense (9 Employees x 10 days x 8 hours x $11.83)	$ 8,517.60
Salaries and Wages Payable		$ 8,517.60
To accrue the expense and liability for vacations
Salaries and Wages Expense (9 Employees x 5 days x 8 hours x $11)	$ 3,960.00
Cash		$ 3,960.00
To record sick leave paid
Salaries and Wages expense	$ 19.44
Salaries and Wages Payable (9 Employees x 9 days x 8 hours x $10.97)	$ 7,108.56
Cash (9 Employees x 9 days x 8 hours x $11)		$ 7,128.00
To record vacation time paid