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 $28,200. M estimated that there were 200 total vacation days available at December 31, 2021. M's employees earn an average of $141 per day. In its December 31, 2021, balance sheet, what amount of liability for compensated absences is M required to report

Answer 1

$28,200

Step-by-step explanation:

M Corp. benefit plan provides employees 15 paid vacation days and M estimated that there were 200 total vacation days and each employee can earn $141 per day. The amount of liability for compensated absences can be calculated by multiplying the number of total vacation days with the wage per day

Liability = no. of days x wage per day

Liability = 200 days x $141

Liability = $28,200