(TCO D) Vargas Company has 35 employees who work 8-hour days and are paid hourly
ID: 2492670 • Letter: #
Question
(TCO D) Vargas Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2009, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2009 may first be taken on January 1, 2010. Information relative to these employees is as follows: Hourly Vacation Days Earned Vacation Days Used Year Wages by Each Employee by Each Employee 2009 $25.80 10 0 2010 27.00 10 8 2011 28.50 10 10 Vargas has chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned. What is the amount of the accrued liability for compensated absences that should be reported at December 31, 2011? (Points : 5)
a. $94,920
b. $90,720
c. $79,800
d. $95,760
Explanation / Answer
Answer is option A - 94920
We summarize as below
Now Liability for Vacations used will be set off on the basis of time from liability which was created earlier.
That is vacations used in 2010 of 8 days is expired from liability created in 2009
Also for vacation used in 2011 of 10 days liability will expire for 2 days pending from 2009 and remaining 8 days will be due from year 2010
Eventually unexpired liability or accrued liability will arise for 2 days pending for 2010 and 10 days pending for 2011
Amount will be calculated as
Total amount = 15120 + 79800
= 94920
year hourly vacation days vacation days Accued liability earned used for each year 2009 25.80 10 0 72240 2010 27 10 8 75600 2011 28.50 10 10 79800 Accrued liability has been calculated as = Hourly x 8 hours x Number of days x Number of workers for 2009 = 25.80 per hour x 8 hours per day x 10 day x 35 workers =25.80 x 8 x 10 x 35 72240.00 for 2010 = 27.00 per hour x 8 hours per day x 10 day x 35 workers = 27 x 8 x 10 x 35 75600 for 2011 = 28.50 per hour x 8 hours per day x 10 day x 35 workers = 28.50 x 8 x 10 x 35 79800Related Questions
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