Question

M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2021, M's unadjusted balance of liability for compensated absences was $27,600. M estimated that there were 200 total vacation days available at December 31, 2021. M's employees earn an average of $138 per day. After recording any necessary adjustment, in its December 31, 2021, balance sheet, what amount of liability for compensated absences is M required to report

Answer 1

$27,600

Step-by-step explanation:

Here, at the end of December 2021, M's unadjusted balance of liability towards vacation days are found to be 200 Days. And also provided that, on an average, each employee will earn $138 per day.

The amount of Liability for compensated absences in M Corporation = 200 Days * $138 per day = $27,600