Question

B Corp. has an employee benefit plan for compensated absences that gives each employee 10 paid vacation days and 10 paid sick days. Both vacation and sick days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days; however, no payment is given for sick days not taken. At December 31, 2018, B's unadjusted balance of liability for compensated absences was $42,000. B estimated that there were 300 total vacation days and 150 sick days available at December 31, 2018. B's employees earn an average of $200 per day. In its December 31, 2018, balance sheet, what amount of liability for compensated absences is B required to report?

Answer 1

B.corp will report $60,000 as liability for absences in its December 31, 2013 balanced sheet.

Step-by-step explanation:

Given data:

10 Paid vacation.

10 Paid sick days.

Total Number of vacations days are 300

Employees average per day earning = $200

Therefore,

Liability for absences
`= 300 days * $200 = $60,000`

B.corp will report $60,000 as liability for absences in its December 31, 2013 balanced sheet

As it is given in the question, no payment is given to the employee for sick leaves