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, 2021, B's unadjusted balance of liability for compensated absences was $34,000. B estimated that there were 320 total vacation days and 160 sick days available at December 31, 2021. B's employees earn an average of $192 per day. In its December 31, 2021, balance sheet, what amount of liability for compensated absences is B required to report

Answer 1

Answer: $61,440

Step-by-step explanation:

Employees can receive payments only for Vacation days and not sick days.

The total number of Vacation days is 320.

Employees make an average of $192 per day so the liability for compensated absences will be;

= 192 * 320

= $61,440