question stephen flynn works for island traders ltd. his annual salary is 80000

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question stephen flynn works for island traders ltd. his annual salary is 80000 and he is paid weekly as part of his employment agrrement he is entitltled to 4 weeks annual leave each year. he recieves a leave loading of 17.5 percent B : provide the apporapriate journal entries assuming that stephen flynn takes two weeks annual leave after being employed for one year and assuming that the tax deducted from the 2 weeks payment is 1000 Part A (a) Cost of annual leave: $80 000 4/52 1.175 = $7,230.77 or $139 / week. Total amount paid to Stephen each year would be: $ For 48 weeks at normal pay rate: $80 000 48/52 = 73, 846 For 4 weeks inclusive of loading: $80 000 4/52 1.175 = 7,231 Total salary and annual leave 81,077 If Denton Ltd recognizes the annual leave obligation throughout the year, there would be the following entry each week: DR Annual leave expense 139 CR Provision for Annual Leave 139 (b) DR Provision for annual leave 3616 CR PAYG tax payable 1 000 CR Cash at bank 2 616 DR Annual leave expense 278 CR Provision for annual leave 278 i dont under stand part b

Explanation / Answer

Stephen Flynn $ Annual salary 80000 Weekly salary 1538 Leave salary (2 weeks) 3077 Leave loading (17.5%) 538 Total 3615 Tax deducted 1000 Net leave salary 2615 Journal entry Debit Credit Salaries 3615 TDS 1000 Cash 2615 (Leave salary paid to Stephen Flynn and tax deducted) Part A (a) Cost of annual leave 139 per week Total amount paid to Stephen each year inclusive of loading for 4 weeks 7231 80000 4 52 6154 1 7231 Salaries 7231 TDS 2000 Bank 5231 (4 weeks' salary including loading paid to Stephen and assumed TDS deducted) If Denton Ltd. recognizes annual leave obligation throughout the year: Provision for Annual Leave 3616 PAYG tax payable 1000 Bank 2616 (Provision for Annual Leave) Annual Leave Expense 278 Provision for Annual Leave 278 (Actual Leave Expense for 2 weeks adjusted)

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