Case 1: Vulture Demolition Ltd (Total 15 marks) Vulture Demolition Ltd has five
ID: 2337939 • Letter: C
Question
Case 1: Vulture Demolition Ltd (Total 15 marks) Vulture Demolition Ltd has five employees and needs to calculate its Long Service Leave (LS) expense for the year ended 30 June 2019. Employees are entitled to 15 weeks LSL after 12 years of service. If employees leave the business after 10 years but before 12 years they are en to be paid out their accumulated LSL. Employees who leave prior to 10 years service receive no LSL payout. The following details are supplied by the owners: Name of Employee Current Salary Years of Service Phineas Mason Herman Schultz Jackson Brice Yu Lew Adrian Toomes $30,000 $48,000 $65,000 126,000 $143,000 30% 40% 80% Students to determine Students to determine The inflation rate is predicted to be The interest rate on bonds is: 6 year government bond yield 5 year government bond yield 4 year government bond yield 3 year government bond yield 2 year government bond yield 1 year government bond yield 3.00% 2.99% 2.80% 2.65% 2.47% 2.45% DR $37,440 The balance in the provision account at the beginning of the year was Required: a) Prepare the journal entires to recognitse the long-service leave expense for 30 June 2C Show all workings b) Prepare the note disclosure regarding the long-service leave provisions for 30 June 20:Explanation / Answer
Vulture Demolition Ltd has five employees and need to calculate its Long Service Leave (LSL)
A) Long Service Leave
Name of Employee Phineas Mason Hermon Schultz Jackspn Brice Yu Lew Adrian Toomes
Salary $30000 $48000 $65000 $126000 $143000
Yrs of Service 3 5 9 9 15
LSL No LSL No LSL No LSL No LSL 22.5
Calculation : 15 weeks /12 yr of service =15/10 =1.5
Adrian Toomes LSL =1.5 * 15=22.5
Prepare a Journal Entry to recognize the long term service leave expense for 30 th june
Long Service leave accrual expense A/C Dr
To Provision for Long Service Leave A/C
Note :1st account will be created under the group indirect expenses
2nd account will be recorded under group current liabilities/provisions
b.Prepare a note disclosure regarding the long service leave provisions for 30 June
Provisions will be credit becuase it is a liability and its shown on the Balance Sheet.
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