1 z 3 Question 2 25 point The Assistant Accountant of Sydney Ltd is reviewing wages and salaries expenses and notes the following A pays its salaries fortnightly in arrears. The next pay day is Thursday 2 July. The fortnightly salary expense is $35,850, of which 511,950 is retained to pay the Australian Taxation Office on behalf of the employees. Payments to the ATO are made every second Monday, with the next payment being made on Monday 6 July. Sydney Ltd's reporting period ends on 30 June B. Sydney Ltd has four employees. According to their particular employment award, long-service leave (LSL) can be taken after 15 years, at which time the employee is entitled to 13 weeks' leave (4.333 days per year entitlement). Further, we will assume that, after 10 years pro rata payment is allowed so that if employees leave after serving 10 years they will be entitled to a cash payment in relation to their pro rata entitlement to long-service leave (that is, the period between 10 and 15 years is considered to be the conditional period'). The employees of Sydney Ltd, their current salaries and their years of service are provided in the table below Name of employee Current salary (5) Years of service Years until LSL vests Probability that LSL will vest Anna 50,000 7 20 Peter 40,000 4 6 25 Rick 60,000 6 4 30 Janna 40,000 3 60 3 High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them Bond rate (%) Corporate bond period to maturity 7 6 4 3 8.0 7.5 6.5 6.0 The projected inflation rate for the foreseeable future is 3 per cent and wage increases will merely keep pace with inflation REQUIRED 2.1 Prepare journal entries for A above for a. 30 June (1 marks) b. 2 July. (2 marks) c. 6 July (1 mark) 2.2 Why do some employers provide their employees with shares or options to buy shares in the organisation? (2 marks) 2.3 For part B, calculate the long-service leave liabilities for Sydney Ltd and prepare the journal entry to record the long-service leave. Assume the balance in the provision at the beginning of the year had been $5,000 Cr. Please show all your calculations. (19 marks) Please download the template below to prepare your response to this question and upload to submit once complete 200974 Question 2 Answer Template.docx 1 z 3 Question 2 25 point The Assistant Accountant of Sydney Ltd is reviewing wages and salaries expenses and notes the following A pays its salaries fortnightly in arrears. The next pay day is Thursday 2 July. The fortnightly salary expense is $35,850, of which 511,950 is retained to pay the Australian Taxation Office on behalf of the employees. Payments to the ATO are made every second Monday, with the next payment being made on Monday 6 July. Sydney Ltd's reporting period ends on 30 June B. Sydney Ltd has four employees. According to their particular employment award, long-service leave (LSL) can be taken after 15 years, at which time the employee is entitled to 13 weeks' leave (4.333 days per year entitlement). Further, we will assume that, after 10 years pro rata payment is allowed so that if employees leave after serving 10 years they will be entitled to a cash payment in relation to their pro rata entitlement to long-service leave (that is, the period between 10 and 15 years is considered to be the conditional period'). The employees of Sydney Ltd, their current salaries and their years of service are provided in the table below Name of employee Current salary (5) Years of service Years until LSL vests Probability that LSL will vest Anna 50,000 7 20 Peter 40,000 4 6 25 Rick 60,000 6 4 30 Janna 40,000 3 60 3 High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them Bond rate (%) Corporate bond period to maturity 7 6 4 3 8.0 7.5 6.5 6.0 The projected inflation rate for the foreseeable future is 3 per cent and wage increases will merely keep pace with inflation REQUIRED 2.1 Prepare journal entries for A above for a. 30 June (1 marks) b. 2 July. (2 marks) c. 6 July (1 mark) 2.2 Why do some employers provide their employees with shares or options to buy shares in the organisation? (2 marks) 2.3 For part B, calculate the long-service leave liabilities for Sydney Ltd and prepare the journal entry to record the long-service leave. Assume the balance in the provision at the beginning of the year had been $5,000 Cr. Please show all your calculations. (19 marks) Please download the template below to prepare your response to this question and upload to submit once complete 200974 Question 2 Answer Template.docx