In: Accounting
Monsters Inc began operations on January 1, 2017. The company employs 15 monsters whose jobs are to scare little children. They are paid eight-hour days and are paid hourly. Each employee earns 15 paid vacation days and 10 paid sick days annually. Vacation days may be taken immediately. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows:
Actual Hourly Vacation Days Used Sick Days Used
Wage Rate by Each Employee by Each Employee
2017 2018 2017 2018 2017 2018
$10 $11 10 15 6 8
Monsters Inc has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when they are earned and to accrue sick pay when it is earned.
Answer | Journal entries | |||
Date | General journal | Debit | Credit | |
Answer A | 2017 | Salaries and wages expense (15 employee * $10 * 8 hour * 15 day) | 18,000 | |
Salaries and wages payable | 18,000 | |||
(To record expense and liabilities for vacation.) | ||||
Answer B | 2017 | Salaries and wages expense (15 employee * $10 * 8 hour * 10 day) | 12,000 | |
Salaries and wages payable | 12,000 | |||
(To record expense and liabilities for sick leave.) | ||||
Answer A | 2017 | Salaries and wages payable (15 employee * $10 * 8 hour * 10 day) | 12,000 | |
Cash | 12,000 | |||
(To record vacation leave paid.) | ||||
Answer B | 2017 | Salaries and wages payable (15 employee * $10 * 8 hour * 6 day) | 7,200 | |
Cash | 7,200 | |||
(To record Sick leave paid.) | ||||
Answer A | 2018 | Salaries and wages expense (15 employee * $11 * 8 hour * 15 day) | 19,800 | |
Salaries and wages payable | 19,800 | |||
(To record expense and liabilities for vacation.) | ||||
Answer B | 2018 | Salaries and wages expense (15 employee * $11 * 8 hour * 10 day) | 13,200 | |
Salaries and wages payable | 13,200 | |||
(To record expense and liabilities for sick leave.) | ||||
(out of 15 vacation leave, 5 leave from 2017 (15 -10 used in 2017) and remaining (15-5 from 2017) 10 from 2018 | ||||
Answer A | 2018 | Salaries and wages expense (19800 - 19200) | 600 | |
Salaries and wages payable [(15 employee * $10 * 8 hour * 5 day) + (15 employee * $11 * 8 hour * 10 day)] | 19,200 | |||
Cash (15 employee * $11 * 8 hour * 15 day) | 19,800 | |||
(To record vacation time paid.) | ||||
(out of 8 sick leave, 4 leave from 2017 (10 -6 used in 2017) and remaining (8-4 from 2017) 4 from 2018 | ||||
Answer B | 2018 | Salaries and wages expense (10560-10080) | 480 | |
Salaries and wages payable [(15 employee * $10 * 8 hour * 4 day) + (15 employee * $11 * 8 hour * 4 day)] | 10,080 | |||
Cash (15 employee * $11 * 8 hour * 8 day) | 10,560 | |||
(To record sick leave paid.) |
Answer C | ||
2017 | Vacation leave | sick leave |
Beginning of year | - | - |
Add : accrued | 18,000 | 12,000 |
less: paid | (12,000) | (7,200) |
end of the year | $ 6,000 | $ 4,800 |
2018 | ||
Beginning of year | 6,000 | 4,800 |
Add : accrued | 19,800 | 13,200 |
less: paid | (19,200) | (10,080) |
end of the year | $ 6,600 | $ 7,920 |
Year | 2017 | 2018 |
Vacation Wages Payable | $ 6,000 | $ 6,600 |
Sick Pay Wages Payable | $ 4,800 | $ 7,920 |