Question
Windsor Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 12 paid
Windsor Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 12 paid vacation days and 7 paid sick days annually. Vacation days may be taken after January 15 of the year following the year in which they are earned. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows.
Actual Hourly Wage Rate | Vacation Days Used by Each Employee | Sick Days Used by Each Employee | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
2019 | 2020 | 2019 | 2020 | 2019 | 2020 | |||||||
$ 12 | $ 13 | 0 | 11 | 5 | 6 |
Windsor Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates of pay without discounting. The company used the following projected rates to accrue vacation time.
Year in Which Vacation Time Was Earned | Projected Future Pay Rates Used to Accrue Vacation Pay | |
---|---|---|
2019 | $ 12.90 | |
2020 | 13.92 |
a) Prepare journal entries to record transactions related to compensated absences during 2019 and 2020. b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2019, and 2020.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started