Sandhill Company began operations on January 2, 2016. It employs 11 individuals
ID: 2533435 • Letter: S
Question
Sandhill Company began operations on January 2, 2016. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 13 paid vacation days and 8 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
2016 2017 2016 2017 2016 2017
$13 $14 0 11 5 6
Sandhill 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 2016 $13.65
2017 $14.73
Date
Account Titles and Explanation
Debit
Credit
(To accrue the expense and liability for vacations)
(To record sick leave paid)
(To record vacation time paid)
(To accrue the expense and liability for vacations)
(To record sick leave paid)
(To record vacation time paid)
Date
Account Titles and Explanation
Debit
Credit
2016(To accrue the expense and liability for vacations)
(To record sick leave paid)
(To record vacation time paid)
2017(To accrue the expense and liability for vacations)
(To record sick leave paid)
(To record vacation time paid)
Explanation / Answer
Year
Particular
Dr.($)
Cr. ($)
Note No.
2016
Salaries and Wages Expenses
Dr.
15616
1
To Salaries and Wages Payable
Cr.
15616
(To accrue the expense and liability for vacations)
2016
Salaries and Wages Expenses
Dr.
5720
2
To Salaries and Wages Payable
Cr.
5720
(To record sick leave paid)
2016
No Entry (Since no vacation days were used)
(To record vacation time paid)
2017
Salaries and Wages Expenses
Dr.
16851
3
To Salaries and Wages Payable
Cr.
16851
(To accrue the expense and liability for vacations)
2017
Salaries and Wages Expenses
Dr.
7392
4
To Cash
Cr.
7392
(To record sick leave paid)
2017
Salaries and Wages Expenses (Bal.)
Dr.
339
Salaries and Wages Payable
Dr.
13213
5
To Cash
Cr.
13552
6
(To record vacation time paid)
WORKING NOTES:
Note No.
Employees
X
Per Hour
X
Hours Per Day
X
Days
=
Amount($)
1
11
X
13.65
X
8
X
13
=
15616
2
11
X
13
X
8
X
5
=
5720
3
11
X
14.73
X
8
X
13
=
16851
4
11
X
14
X
8
X
6
=
7392
5
11
X
13.65
X
8
X
11
=
13213
6
11
X
14
X
8
X
11
=
13552
Year
Particular
Dr.($)
Cr. ($)
Note No.
2016
Salaries and Wages Expenses
Dr.
15616
1
To Salaries and Wages Payable
Cr.
15616
(To accrue the expense and liability for vacations)
2016
Salaries and Wages Expenses
Dr.
5720
2
To Salaries and Wages Payable
Cr.
5720
(To record sick leave paid)
2016
No Entry (Since no vacation days were used)
(To record vacation time paid)
2017
Salaries and Wages Expenses
Dr.
16851
3
To Salaries and Wages Payable
Cr.
16851
(To accrue the expense and liability for vacations)
2017
Salaries and Wages Expenses
Dr.
7392
4
To Cash
Cr.
7392
(To record sick leave paid)
2017
Salaries and Wages Expenses (Bal.)
Dr.
339
Salaries and Wages Payable
Dr.
13213
5
To Cash
Cr.
13552
6
(To record vacation time paid)
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