A company gives each of its 50 employees assumed they are all employed continuously from 2010

| March 29, 2017

Question
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

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