Sheffield Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 13 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 Vacation Days Used by Each Employee Sick Days Used
Sheffield Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 13 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 Vacation Days Used by Each Employee Sick Days Used
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sheffield Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 13 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.
Sheffield 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.
|
Actual Hourly
Wage Rate |
Vacation Days Used
by Each Employee |
Sick Days Used
by Each Employee |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2019
|
2020
|
2019
|
2020
|
2019
|
2020
|
|||||||
| $13 | $14 | 0 | 11 | 5 | 6 |
Sheffield 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
Time Was Earned |
Projected Future Pay Rates
Used to Accrue Vacation Pay |
|
|---|---|---|
|
2019
|
$13.65 | |
|
2020
|
14.73 |
Prepare journal entries to record transactions related to compensated absences during 2019 and 2020
Expert Solution
Step 1
Compensated absences are hours for which an employee is paid at the regular rate of pay when they are unable to perform their job duties because of vacation, personal time off or any other kind of absence.
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