Exercise 13-4 Tamarisk Company began operations on January 2, 2016. It employs 1

Question

Exercise 13-4 Tamarisk Company began operations on January 2, 2016. It employs 10 individuals who work 8-hour days and are paid hourly. Each employee earns 11 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 2016 2017 $11 $12 Vacation Days Used Sick Days Used by Each Employee by Each Employee 2016 2017 2016 2017 10 Tamarisk Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates ot pay without discounting. The company used the following projected rates to accrue vacation time. Year in Which Vacation Projected Future Pay Rates Time Was Earned 2016 2017 Used to Accrue Vacation Pay $11.93 12.88

Explanation / Answer

Solution:-

Journal entries to record transactions related to compensated absences during 2016:-

Journal entries to record transactions related to compensated absences during 2017:-

= 9,600 - 9544

= $56

Note:- Vacation days and sick days are paid at the employee's present wages.

2016 (To accrue the expenses and liability for vacations ) Debit Credit salaries and wages expenses $10,498.4 (a) salaries and wages payable $10,498.4 2016 (To record sick level paid ) Salaries and wages expense $3,520 (b) Salaries and wages payable $3,520 2016 (To record vacation time paid) no entry , Since no excursion days were utilized.

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