**Liability for Compensated Absences**Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2019 and 2020.---| | 2019 | 2020 ||---------------------------|-------|-------|| **Vacation Wages Payable** | $3888 | $4968 || **Sick Pay Wages Payable** | $864 | |This table shows the liabilities related to compensated absences for the years 2019 and 2020. The values include Vacation Wages Payable and Sick Pay Wages Payable. The Vacation Wages Payable increased from $3888 in 2019 to $4968 in 2020. The Sick Pay Wages Payable for 2019 is noted as $864, with 2020 data not provided. Ayayai Company began operations on January 2, 2019. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 9 paid vacation days and 7 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.**Table: Compensation Details**- **Actual Hourly Wage Rate**: - 2019: $6 - 2020: $7- **Vacation Days Used by Each Employee**: - 2019: 0 - 2020: 8- **Sick Days Used by Each Employee**: - 2019: 5 - 2020: 6Ayayai 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.

2 2019 2020 Vacation Wages Payable $3,888 $4,968 Sick Wages Payable $864 $1,512 EXPLANATION: I. VACATION WAGES PAYABLE 2019 In 2019, Provision Made for Vacation Wages Payable = $3,888 No vacation Provision is applied for Any Expense during 2019. 2020 Begining Balance in Vacation Wages Payable $3,888 Add: Provision made during 2020 $4,536 Less: Vacation Wages Paid during 2020 $(3,456) PROVISION FOR VACATION WAGES 2020: $4,968 II. SICK WAGES PAYABLE 2019 Salaries and Wages Sick Payable during 2019 $3,024 Less: Suck Wages Expense paid during 2019 $(2160) Sick Wgaes Payable at the end of 2019 $864 2020 Begining Sick Wages Payable Balance $864 Add: Sick Wages Payable provision made during 2020 $3,528 Less: Sick Wages Expense paid during 2020 $(2,880) Sick Wages Payable at the End of 2020 $1,512I. YEAR 2019 Entry 1 Vacation Pay Accrued will be: 9 Employees * 8 Hrs Per Day * $6 Per hour * 9 Days : $3,888 Sick Days Accrued Pay: Even though Sick Days used are 5, but Pay will be accrued for 7 Sick Days. : 9 Employees * 8 Hours Per Day * $6 Per Hour * 7 Days : $3,024 Actual Payment: Since, Vacation Days used are 0 In 2019 amd Sick Days Used are 5 Days, Therefore, Compensation will actually be Paid for 5 Sick Days and 0 Vacation Days. 9 Employees * 8 Hours Per day * $6 Per hour * 5 Days : $2160II. YEAR 2020 Vacation Expense Accrued will be Based on 9 Vacation Days: 9 Employees * 8 Hours Per Day * 9 Days * $7 Per Hour : $4,536 Sick Pay Expense Accrued in 2020 will be: 9 Employees * 8 Hours Per Day * 7 Days * $7 Per hour : $3,528III. Actual Vacation Days Paid in 2020 In 2020, Actual Vacation Days Used by Employees are 8 Days. Therefore, Payment For Actual Vacation Days will be made as Follows: Cash Paid for Vacation Pay in 2020: 8 Days * 8 Hours Per Day * 9 Employees * $7 : $4,032 Out of Which Salaries and Payable Account Balance that is utilised will be: 9 Employees * 8 Hours Per Day * 8 Days * $6 : $3,456 Salaries and Wages Expense to be Booked: $4,032 - $3,456 : $576IV. PAYMENT FOR SICK PAY In 2020, Actual Sick Days used by Employees are 6 Days. Therefore, Payment For Actual Sick Days will be made as Follows: Cash Paid for Sick Pay in 2020: 6 Days * $7 Per Hour * 8 Hours Per Day * 9 Employees : $3,024 Out of Which Salaries and Wages Payable Account Utilised will be: {(7-5) Days * $6 Per Hour * 8 Hours Per Day * 9 Employess} + {(6 - 2) Days * $7 Per hour * 8 hours Per Day * 9 Employees} : $2,880 Salaries and Wages Expense to be Booked: $3,024 - $2880 : $144

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Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2019 and 2020. 2019 2020 Vacation Wages Payable 2$ 3888 2$ 4968 Sick Pay Wages Payable 2$ 864 $

Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2019 and 2020. 2019 2020 Vacation Wages Payable 2$ 3888 2$ 4968 Sick Pay Wages Payable 2$ 864 $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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For 2019
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