Exercise 13B-4 (Part Level Submission) Teal Company began operations on January

Question

Exercise 13B-4 (Part Level Submission) Teal 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 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 Vacation Days Used Sick Days Used by Each Employee Wage Rate by Each Employee 2016 2017 2016 2017 2016 2017 $11 $12 10 4 5 Teal 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 Projected Future Pay Rates Time Was Earned 2016 2017 Used to Accrue Vacation Pay $11.61 12.53

Explanation / Answer

The corrected journal entries are provided below:

_____

Date Account Titles and Explanation Debit Credit 2016 Salaries and Wages Expense (10*8*11*11.61) $10,217 Salaries and Wages Payable $10,217 (To accrue the expense and liability for vacations) Salaries and Wages Expense (10*8*4*11) $3,520 Cash $3,520 (To record sick leave paid) No Entry $0 No Entry $0 (To record vacation time paid)

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