1. Calculate thr sick leave related liability as at 31 December 2019 2. prepare journal entries for the year 31 December 2020 and 7 January 2021 (please answer all questions. Thank you)

QUESTION 3 (30 marks) Transaction 1 The 100 employees of NAM JEWELS LIMITED are each entitled to 5 working days of paid sick leave for each year. Unused sick leave may be carried forward for one calendar year. Sick leave is taken first out of the current year's entitlement and then out of any balance brought forward from the previous year (a LIFO basis). At 31 December 2019 the average unused entitlement is 2 days per employee. The entity expects, on the basis of experience that is expected to continue that 92 employees will take no more than five days of paid sick leave in 2020 and that the remaining & will take an average an of six and a half days each. In December 2020 to restructure its workforce (which was immediately communicated) in such a way that all employees of the age of 55, but below the age of 60 at the reporting date, could retire immediately should they choose to do so. Employees of 60 years and older, up to 65 years at the statement of financial position date, will be forced to retire immediately, but will receive the post-employment benefits they would have been entitled to had they retired at the age of 65. A directive on the matter was obtained from NAMRA beforehand, and amounts will therefore be allowed for tax purposes. Tax rate is 32%, payment of any benefits associated with early or voluntary retirement will take place one week after statement of financial position date (end of reporting period). The information below is applicable: Employees between 55 years and 59 years and 364 days: Total number of employees in age bracket 40 Average payment per employee to encourage retirement N$20 000 Percentage of employees expected to take advantage of the offer 60% Employees with ages between 60 and 64 years and 364 days: Total number of employees 20 Additional contribution to defined contribution fund made on 7 January 2021 To ensure promised post-employment benefits as at 65 years of age N$600 000 Marks Required: In respect of transaction 1 3 Calculate the sick leave related liability as at 31 December 2019 Prepare journal entries for the year 31 December 2020 and 7 January 2021 12 15 QUESTION 3 (30 marks) Transaction 1 The 100 employees of NAM JEWELS LIMITED are each entitled to 5 working days of paid sick leave for each year. Unused sick leave may be carried forward for one calendar year. Sick leave is taken first out of the current year's entitlement and then out of any balance brought forward from the previous year (a LIFO basis). At 31 December 2019 the average unused entitlement is 2 days per employee. The entity expects, on the basis of experience that is expected to continue that 92 employees will take no more than five days of paid sick leave in 2020 and that the remaining & will take an average an of six and a half days each. In December 2020 to restructure its workforce (which was immediately communicated) in such a way that all employees of the age of 55, but below the age of 60 at the reporting date, could retire immediately should they choose to do so. Employees of 60 years and older, up to 65 years at the statement of financial position date, will be forced to retire immediately, but will receive the post-employment benefits they would have been entitled to had they retired at the age of 65. A directive on the matter was obtained from NAMRA beforehand, and amounts will therefore be allowed for tax purposes. Tax rate is 32%, payment of any benefits associated with early or voluntary retirement will take place one week after statement of financial position date (end of reporting period). The information below is applicable: Employees between 55 years and 59 years and 364 days: Total number of employees in age bracket 40 Average payment per employee to encourage retirement N$20 000 Percentage of employees expected to take advantage of the offer 60% Employees with ages between 60 and 64 years and 364 days: Total number of employees 20 Additional contribution to defined contribution fund made on 7 January 2021 To ensure promised post-employment benefits as at 65 years of age N$600 000 Marks Required: In respect of transaction 1 3 Calculate the sick leave related liability as at 31 December 2019 Prepare journal entries for the year 31 December 2020 and 7 January 2021 12 15