Question

Desert Company gives each of its 75 employees 11 days of vacation a year if they are employed at the end of the year. Assume the employees were employed continuously during the year. The vacation accumulates and may be taken starting January 1st of the next year. The employees work 8 per day. During the year, they made $29 per hour. The company's policy is to record the liability existing at the end of each year at the wage rate for that year. What amount of vacation liability would be reflected on Desert's year-end balance sheet?

Answer 1

Answer: $191,400

Explanation:

Based on the information given in the question, the amount of vacation liability that would be reflected on Desert's year-end balance sheet will be calculated thus:

= Number of employees × Number of vacation days × Number of hours worked per day by the employees × Amount made per hour by employees

= 75 × 11 × 8 × 29

= $191,400

Therefore, the vacation liability is $191,400