Question
Dainty Ltd has an average weekly payroll of $200 000. The employees are entitled to 2 weeks', nonvesting sick leave per annum. Past experience suggests
Dainty Ltd has an average weekly payroll of $200 000. The employees are entitled to 2 weeks', nonvesting sick leave per annum. Past experience suggests that 56% of employees will take the full 2 weeks' sick leave and 22% will take 1 week's leave each year. The rest of the employees take no sick leave. Required: a) Calculate the expected annual sick-leave expense for Dainty Ltd (on the basis of average salaries). (2 marks) b) Provide the journal entry necessary to recognise the sick-leave entitlement expense as it accrues each week. (2 marks) c) In the current week an employee with a weekly salary of $600 has been off sick for the first time this year. The employee took 2 days off out of her normal 5-day working week. Assuming that PAYG tax is deducted at 30%, what would the entry be to record the employee's weekly salary (round amounts to the nearest dollar)? (3 marks)
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