Bear Island Ltd has a weekly payroll of $350 000. The employees receive entitlements to 3 weeks’ sick leave per year. The sick-leave entitlements are classified as non-vesting. Past experience, and experience within the industry, suggest that 60 per cent of employees will use their full 3 weeks’ entitlement each year; 10 per cent of employees will take one week’s sick leave each year; and 10 per cent of employees will take 3 day’s sick leave each year. REQUIRED a) Calculate the expected annual sick-leave expense for Bear Island Ltd (on the basis of average salaries). b) Provide the journal entries necessary each week to recognise the sick-leave entitlement expense as it accrues.
Bear Island Ltd has a weekly payroll of $350 000. The employees receive entitlements to 3 weeks’ sick leave per year. The sick-leave entitlements are classified as non-vesting. Past experience, and experience within the industry, suggest that 60 per cent of employees will use their full 3 weeks’ entitlement each year; 10 per cent of employees will take one week’s sick leave each year; and 10 per cent of employees will take 3 day’s sick leave each year. REQUIRED a) Calculate the expected annual sick-leave expense for Bear Island Ltd (on the basis of average salaries). b) Provide the journal entries necessary each week to recognise the sick-leave entitlement expense as it accrues.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bear Island Ltd has a weekly payroll of $350 000. The employees receive entitlements to 3 weeks’ sick leave per year. The sick-leave entitlements are classified as non-vesting. Past experience, and experience within the industry, suggest that 60 per cent of employees will use their full 3 weeks’ entitlement each year; 10 per cent of employees will take one week’s sick leave each year; and 10 per cent of employees will take 3 day’s sick leave each year.
REQUIRED
a) Calculate the expected annual sick-leave expense for Bear Island Ltd (on the basis of average salaries).
b) Provide the
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Total annual Sick Leave expense
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