Pearl Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Eachemployee earns 11 paid vacation days and 8 paid sick days annually. Vacation days may be taken after January 15 of the year followingthe year in which they are earned. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additionalinformation is as follows.Actual HourlyWage Rate2019$92020$10Vacation Days Usedby Each Employee20192020Vacation Wages Payable $10Sick Pay Wages PayableSick Days Usedby Each Employee20196Pearl Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and toaccrue sick pay when earned.2020Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31,2019 and 2020.20197$+A2020

The term "accrued liability" refers to an expense incurred but not yet paid for by a business. These…

Answered: Compute the amounts of any liability…

Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2019 and 2020.

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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Question

Pearl Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Each
employee earns 11 paid vacation days and 8 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
2019
$9
2020
$10
Vacation Days Used
by Each Employee
2019
2020
Vacation Wages Payable $
10
Sick Pay Wages Payable
Sick Days Used
by Each Employee
2019
6
Pearl 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.
2020
Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31,
2019 and 2020.
2019
7
$
+A
2020

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Step 1: Definition of Accrued liabilities

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Step 2: Calculation of accrued wages, wages paid for Vacation wages payable

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Step 3: Calculation of accrued wages, wages paid for sick pay wages payable

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