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Answer for c): Bear Island Ltd has a weekly payroll of $300 000. The employees receive entitlements to two weeks' sick leave per year. The

Answer for c):

Bear Island Ltd has a weekly payroll of $300 000. The employees receive entitlements to two weeks' sick leave per year. The sick-leave entitlements are classified as non-vesting. Past experience, and experience within the industry, suggest that 60 per cent of employees will use their full two weeks' entitlement each year; 20 per cent of employees will take one week's sick leave each year; and 10 per cent of employees will take one day's sick leave each year.

a) Calculate the expected annual sick-leave expense for Bear Island Ltd (on the basis of average salaries).

$300,000 x 2 x 0.6 = $360,000

$300,000 x 1 x 0.2 = $60,000

$300,000 x 1/5 x 0.1 = $6,000

$426,000

b )Provide the journal entries necessary to recognise the sick-leave entitlement expense as it accrues.

$426,000/52 = $8192 week

Dr Sick leave expense8192

CrProvision for sick leave8192

(c)Explain how your answer to part (a) and (b) above would change if:

i.The sick leave was vesting;

ii.The sick leave was non-accumulating and non-vesting.

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