A company gives each of its 50 employees (assumed they are all


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A company gives each of its 50 employees (assumed they are all employed continuously from 2010 through 2011) 12 days of vacation year if they are employed at the end of the year.  The vacation accumulates and may be taken starting Jan 1 of the next year.  The employees work 8 hour days.  In 2010, they made $14 an hour.  In 2011, they made $16.00 an hour.  During 2011, they took an average of 9 days of vacation each.  The company’s policy is to record the liability existing at the end of each year @ the wage rate for that year.  What amount of vacation liability would be reflected on 2010 and 2011 balance sheet respectively. The answer posted is:  $67200 of 2010 and $96000 for 2011. I figured the 2010 liability as: 50x8x12x14 =67200 Salaries and wages expense debit 67200 Salaries and wages payable credit 67200 for 2011 I figured the vacation liability to be: 50x8x12x16 =76800 Salaries and wages expense debit 76800 salaries and wages payable credit 76800 then I have to account for the accumulated payment of the 9 vaca days used: 50x8x9x14 = 50400 Salaries & wages payable debit 50400 cash credit 50400 67200+76800-50400 = 93600.  Which is one of the choices but apparently is the wrong one.  I tried to calculate the amount using the 16$ an hour instead of the 14 and the end result was still not $96,000. Where am I going wrong.  Please provide steps for the solution Aiden09
posted a question · Feb 15, 2016 at 3:13pm

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