Question

M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2021, M's unadjusted balance of liability for compensated absences was $32,400. M estimated that there were 200 total vacation days available at December 31, 2021. M's employees earn an average of $162 per day. In its December 31, 2021, balance sheet, what amount of liability for compensated absences is M required to report

Answer 1

Answer:

$28,200

Explanation:

There are 200 vacation days available as at December 31, 2021.

The liability compensated absences will be the amount that M Corp. owes employees should they take those 200 vacation days.  

Amount of liability = Number of total vacation days * Wage per day

Amount of liability = 200 * 141 per day

Amount of liability = $28,200