Question

On January 1, 2018, G Corporation agreed to grant all its employees two weeks paid vacation each year, with the stipulation that vacations earned each year can be taken the following year. For the year ended December 31, 2018, G's employees each earned an average of $700 per week. A total of 460 vacation weeks earned in 2018 were not taken during 2018. Wage rates for employees rose by an average of 8 percent by the time vacations actually were taken in 2019. What is the amount of G's 2019 wages expense related to 2018 vacation time?

Answer 1

Answer: $25,760

Explanation:

Given that,

Average earning of each employee = $700 per week

vacation weeks earned in 2018 were not taken in 2018 = 460

Wage rates for employees rose by an average of 8 percent.

Total earnings = $700 per week × 460

                        = $322,000

Amount of G's 2019 wages expense = Total earnings × Wage rate

                                                             = $322,000 × 8%

                                                             = $25,760