16. A company gives each of its 50 employees (assume they were all employed cont

Question

16.       A company gives each of its 50 employees (assume they were all employed continuously through 2014 and 2015) 12 days of vacation a year if they are employed at the end of the year. The vacation accumulates and may be taken starting January 1 of the next year. The employees work 8 hours per day. In 2014, they made $24.50 per hour and in 2015 they made $28 per hour. During 2015, they took an average of 9 days of vacation each. The company’s policy is to record the liability existing at the end of each year at the wage rate for that year. What amount of vacation liability would be reflected on the 2014 and 2015 balance sheets, respectively?

a.   $117,600; $163,800

b.   $134,400; $168,000

c.   $117,600; $168,000

d.   $134,400; $163,800

Answer is C. Can anyone show me the process?

Explanation / Answer

For 2014 = 50 x 12 x 8 x 24.5 = 117,600

For 2015 = 50 * (12+(12-9) * 8 * 28 =

               = 50 x 15 x 8 x 28 = 168,000

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