Exercise 13-3 Actual Hourly Wage Rate Vacation Days Used by Each Employee Sick D

Question

Exercise 13-3

Actual Hourly
Wage Rate

Vacation Days Used
by Each Employee

Sick Days Used
by Each Employee

2016

2017

2016

2017

2016

2017

Date

Account Titles and Explanation

Debit

Credit

2016

(To accrue the expense and liability for vacations)

(To accrue the expense and liability for sick pay)

(To record payment for compensated time when used by employees)

2017

(To accrue the expense and liability for vacations)

(To accrue the expense and liability for sick pay)

(To record vacation time paid)

(To record sick leave paid)

SHOW LIST OF ACCOUNTS

LINK TO TEXT

2016

2017

Exercise 13-3

Tamarisk Company began operations on January 2, 2016. It employs 8 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 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

$9 $10 0 9 4 5
Tamarisk Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and to accrue sick pay when earned.

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 2016 Wage Exp.                                                Dr.            9,216    To Vacation Wages Payable            5,760    To Sick Wages Payable            3,456 (To Record Accrual of Vacation & Sick Days) 2016 Sick Wages Payable                              Dr.            2,304     To Cash            2,304 (Record Sick Wages Paid) 2016 No Entry for Vacation Wages - As no Amt. is Paid 2017 Wage Exp.                                                Dr.            9,856    To Vacation Wages Payable            6,400    To Sick Wages Payable            3,456 (To Record Accrual of Vacation & Sick Days) 2017 Sick Wages Payable                              Dr.            5,760 Vacation Wages Payable                    Dr.            3,200     To Cash            8,960 (Record Wages Paid) 2016 Vacation Wages Patyable Sick Pay Wages Payable Begininng Balance 0 0 Add: Accrued 5760 3456 Less: Paid 0 -2304 Ending Balance - Dec 31, 2016 5760 1152 Vacation Wages Payable = 8 Employess X 10 Days X $9 x 8 Hrs = $5,760 Sick Wages Payable = 8 Employess X 6 Days X $9 X 8 Hrs = $7,749.28 or $3,456 Paid in 2016 Vacation Wages = Nil Sick Pay Wages = 8 Employess X 4 Days X 8 Hrs X $9 = $2,304 2017 Vacation Wages Patyable Sick Pay Wages Payable Begininng Balance - Jan 1, 2017 5760 1152 Add: Accrued 6400 3456 Less: Paid -5760 -3200 Ending Balance - Dec 31, 2017 6400 1408 Vacation Wages Payable = 8 Employess X 10 Days X $10 x 8 Hrs = $14,329.92 or $6,400 Sick Wages Payable = 8 Employess X 6 Days X $9 X 8 Hrs = $8359.12 or $3,456 Paid in 2017 Vacation Wages = 8 Employess X 9 Days X 8 Hrs X $10 = $5760 Saick Pay Wages = 8 Employess X 5 Days X 8 Hrs X $10 = $3,200

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