Question

Exercise 13-3 Sage Company began operations on January 2, 2016. It employs 8 individuals who work 8-hour days and are paid hourly. Each employee earns 10 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. Vacation Days Used by Each Employee Actual Hourly Wage Rate Sick Days Used by Each Employee 2017 2016 2017 2016 2016 2017 $8 $9 9 6 7 Sage 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 Credit Debit 2016 (To accrue the expense and liability for vacations) (To accrue the expense and liability for sick pay)
Exercise 13-3 Sage Company began operations on January 2, 2016. It employs 8 individuals who work 8-hour days and are paid hourly. Each employee earns 10 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 Hourly Wage Rate Vacation Days Used by Each Employee Sick Days Used by Each Employee 2016 2017 2016 2017 2016 2017 $8 $9 0 9 6 7 Sage 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 Debit Credit 2016 (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) 2017 (To accrue the expense and liability for vacations) (To accrue the expense and liability for sick pay) (To record vacation time paid) (To record sick leave paid) SHOW LIST OF ACCOUNTS LINK TO TEXT Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2016 and 2017. 2016 2017 Vacation Wages Payable $ $ Sick Pay Wages Payable

Answer 1

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Year	Account	Debit	Credit
2016	Salaries and Wages Expense	$    5,120
	Salaries and Wages Payable		$    5,120
	(To accrue expense and liability for vacation)
	8 Employees*8 Hours*$8*10 Paid Vacation
	Salaries and Wages Expense	$    4,096
	Salaries and Wages Payable		$    4,096
	(To accrue expense and liability for sick pay)
	8 Employees*8 Hours*$8*8 Paid Vacation
	Salaries and Wages Payable	$    3,072
	Cash		$    3,072
	(To record payment for compensated time when used by employees)
	10 Employees*8 Hours*$11*6 Paid Sick Days
2017	Salaries and Wages Expense	$    5,760
	Salaries and Wages Payable		$    5,760
	(To accrue expense and liability for vacation)
	8 Employees*8 Hours*$9*10 Paid Vacation
	Salaries and Wages Expense	$    4,608
	Salaries and Wages Payable		$    4,608
	(To accrue expense and liability for sick pay)
	8 Employees*8 Hours*$9*8 Paid Vacation
	Salaries and Wages Expense (Plug in)	$        576
	Salaries and Wages Payable	$    4,608
	Cash		$    5,184
	(To record vacation time paid)
	8 Employees*8 Hours*$8*9 Paid Vacation-Payable
	8 Employees*8 Hours*$9*9 Paid Vacation-Cash
	Salaries and Wages Expense (Plug in)	$        128
	Salaries and Wages Payable	$    3,904
	Cash		$    4,032
	(To record Sick Leave paid)
	8 Employees*8 Hours*$9*7 Paid Vacation-Cash
	For Payable Account:
	8 Employees*8 Hours*$8*(8-6) Paid Sick Days		$    1,024
	8 Employees*8 Hours*$9*(7-2) Paid Sick Days		$    2,880
			$    3,904
	Part 2			Year 2016		Year 2017
				Vacation Wages Payable	Sick wages payable	Vacation Wages Payable	Sick wages payable
	January 1 Balance			$                                         -	$                               -	$                                  5,120	$                        1,024
	Add: Accrued			$                                  5,120	$                        4,096	$                                  5,760	$                        4,608
	Less: Paid			$                                         -	$                      -3,072	$                                -4,608	$                      -3,904
	Dec 31 Balance			$                                  5,120	$                        1,024	$                                  6,272	$                        1,728