Exercise 13-3 Kingbird Company began operations on January 2, 2016. It employs 1

Question

Exercise 13-3 Kingbird Company began operations on January 2, 2016. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 11 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 HourlyVacation Days Used Sick Days Used by Each Employee Wage Rate 2016 2017 $10 by Each Employee 2016 2017 2016 2017 $9 10 7 Kingbird Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and to accrue sick pay when earned Prepare journal entries to record transactions related to compensated absences during 2016 and 2017. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation 2016 Debit Credit (To accrue the expense and liability for vacations) (To accrue the expense and liability for sick pay) To record payment for compensated time when used by employees)

Explanation / Answer

Journal Entries related to compensated absences during 2016 and 2017 (Amount in $)

Computation of the amounts of liability for compensated absences

8,712

(8,712+0)

10,472

(8,712+9,680-7,920)

1,584

(6,336-4,752)

2,640

(1,584+7,040-5,984)

Date Account Titles and Explanations Debit   Credit   2016 Wage Expense (11*11*8 hours*$9) 8,712 Vacation Wages payable 8,712 (To accrue the expense and liability for vacations) 2016 Wage Expense (11*8*8 hrs*$9) 6,336 Sick pay wages payable 6,336 (To accrue the expense and liability for sick pay) 2016 Sick pay wages payable (11*6*8 hrs*$9) 4,752 Cash 4,752 (To record payment of compensated time when used by employees) 2017 Wage Expense (11*11*8 hours*$10) 9,680 Vacation Wages payable 9,680 (To accrue the expense and liability for vacations) 2017 Wage Expense (11*8*8 hrs*$10) 7,040 Sick pay wages payable 7,040 (To accrue the expense and liability for sick pay) 2017 Vacation Wages payable (11*10*8 hrs*$9) 7,920 Wage Expense (Bal. fig.) (8,800-7,920) 880 Cash (11*10*8 hrs*$10) 8,800 (To record vacation time paid) 2017 Sick pay wages payable [(11*2*8 hrs*$9)+(11*5*8 hrs*$10) 5,984 Wage Expense (Bal.Fig.) (6,160-5,984) 176 Cash (11*7*8 hrs*$10) 6,160 (To record sick leave paid)

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