Asked by Marianne Szabelski on Jun 19, 2024
Verified
Claremore Company instituted a vacation and sick pay policy on January 1, 2010.Thirty employees, averaging $100 per day per employee, were covered under the plan.The policy allows each employee five days of sick pay and twelve days of vacation pay per year.The sick pay accumulates up to a ten-day maximum.Vacation pay accumulates without a maximum.The sick pay vests, but vacation pay does not.A total of 400 days of sick and vacation days were taken during 2010.
Required:
Prepare the December 31, 2010 year-end accrual for compensated absences.
Sick Pay Policy
A company's formal plan detailing the compensation employees receive when they are unable to work due to illness.
Vacation Pay
This refers to the compensation employees are entitled to receive for days they are on vacation and not working.
Accrual
Accrual accounting records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur.
- Describe the Generally Accepted Accounting Principles (GAAP) criteria for recording compensated leaves.
Verified Answer
Learning Objectives
- Describe the Generally Accepted Accounting Principles (GAAP) criteria for recording compensated leaves.
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