Question

Pearl Company began operations on January 2, 2016. It employs 12 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 by Each Employee 2016 2017 2016 2017 2016 2017 $13 $15 0 12 5 7 Pearl 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 2016 $14.19 2017 15.31 Prepare journal entries to record transactions related to compensated absences during 2016 and 2017. 2016: 1. To accrue expense and liability for vacations 2. To record sick leave paid g

Answer 1

Answer and Explanation:

Pearl Company Journal entries

Account Titles and Explanation Debit Credit

2016

Dr Salaries and wages expense

(12 x 8 x 13 x $13) 16,224

Cr Salaries and wages payable 16,224

Dr Salaries and wages expense

(12x 8 x 8x $13) 9,984

Cr Salaries and wages payable 9,984

Dr Salaries and wages payable

(12x 8 x 5x $13)6,240

Cr Cash 6,240

2017

Dr Salaries and wages expense

(12 x 8 x 13 x $15) 18,720

Cr Salaries and wages payable 18,720

Dr Salaries and wages expense

(12x 8 x 8x $15) 11,520

Cr Salaries and wages payable 11,520

Dr Salaries and wages expense 2,304

Dr Salaries and wages payable

(12 x 8 x 12 x $13) 14,976

Cr Cash

(12 x 8 x 12 x $15) 17,280

Dr Salaries and wages expense 576

Dr Salaries and wages payable

(12 x 8 x 3x $13)+(12 x 8 x 5x $15) 10,944

Cr Cash (12 x 8 x 8 x $15) 11,520