(Compensated Absences)

Matt Broderick Company began operations on January 2, 2016. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 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 by each employee
2016	2017	2016	2017	2016	2017
\(10	\)11	0	9	4	5

Matt Broderick 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.

Instructions

(a) Prepare journal entries to record transactions related to compensated absences during 2016 and 2017.

(b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2016 and 2017.

Date

Accounts and Explanation

Debit $

Credit $

Salaries expenses

$7,200

Salaries payable$\mathbf{(}\mathbf{9}\mathbf{employees}\mathbf{\times }\mathbf{10}\mathbf{days}\mathbf{\times }\mathbf{8}\mathbf{hours}\mathbf{\times }\mathbf{\$}\mathbf{10}\mathbf{)}$

$7,200

(To record the accrual of vacation leaves)

Salaries expenses

$4,320

Salaries payable$(9\mathrm{employees}\times 6\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}10)$

$4,320

(To record the accrual of sick leave)

Salaries payable

$2,880

Cash$(9\mathrm{employees}\times 4\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}10)$

$2,880

(To record the sick leaves used)

Salaries expenses

$7,920

Salaries payable$(9\mathrm{employees}\times 10\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}11)$

$7,920

(To record the accrual of vacation leaves)

Salaries expenses

$4,752

Salaries payable$(9\mathrm{employees}\times 6\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}11)$

$4,752

(To record the accrual of sick leave)

Salaries expenses

$648

Salaries payable$(9\mathrm{employees}\times 9\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}10)$

$6,480

Cash$(9\mathrm{employees}\times 9\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}11)$

$7,128

(To record the vacation leaves used)

Salaries expenses

$144

Salaries payable$(9\mathrm{employees}\times 3\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}11+9\mathrm{employees}\times 2\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}10)$

$3,816

Cash

$3,960

(To record the sick leaves used)

1 Jan balance

$0

$0

$7,200

$1,440

Accrued

$7,200

$4,320

$7,920

$4,752

Less: paid

0

($2,880)

($6,480)

($3,816)

31 Dec balance

$7,200

$1,440

$8,640

$2,376