Transaction 1The 100 employees of NAM JEWELS LIMITED are each entitled to 5 working days of paidsick leave for each year. Unused sick leave may be carried forward for one calendar year.Sick leave is taken first out of the current year's entitlement and then out of any balancebrought forward from the previous year (a LIFO basis).At 31 December 2019 the average unused entitlement is 2 days per employee. The entityexpects, on the basis of experience that is expected to continue, that 92 employees willtake no more than five days of paid sick leave in 2020 and that the remaining 8 will takean average an of six and a half days each.In December 2020 to restructure its workforce (which was immediately communicated) insuch a way that all employees of the age of 55, but below the age of 60 at the reportingdate, could retire immediately should they choose to do so. Employees of 60 years andolder, up to 65 years at the statement of financial position date, will be forced to retireimmediately, but will receive the post-employment benefits they would have been entitledto had they retired at the age of 65.A directive on the matter was obtained from NAMRA beforehand, and amounts willtherefore be allowed for tax purposes. Tax rate is 32%, payment of any benefitsassociated with early or voluntary retirement will take place one week after statement offinancial position date (end of reporting period).The information below is applicable:Employees between 55 years and 59 years and 364 days:Total number of employees in age bracketAverage payment per employee to encourage retirementPercentage of employees expected to take advantage of the offer40N$20 00060%Employees with ages between 60 and 64 years and 364 days:Total number of employeesAdditional contribution to defined contribution fund made on 7 January 2021To ensure promised post-employment benefits as at 65 years of age20N$600 000 Required:In respect of transaction 1Calculate the sick leave related liability as at 31December 2019Prepare journal entries for the year 31 December2020 and 7 January 2021

Sick leaves refer to the type of leave on which the employer or the company pays off the employee's…

loyees of NAM JEWELS LIMITED are each ent each year. Unused sick leave may be carried taken first out of the current year's entitlement ard from the previous year (a LIFO basis). ber 2019 the average unused entitlement is 2 d che basis of experience that is expected to cor than five days of paid sick leave in 2020 and an of six and a half days each. 2020 to restructure its workforce (which was in hat all employees of the age of 55, but below etire immediately should they choose to do so

loyees of NAM JEWELS LIMITED are each ent each year. Unused sick leave may be carried taken first out of the current year's entitlement ard from the previous year (a LIFO basis). ber 2019 the average unused entitlement is 2 d che basis of experience that is expected to cor than five days of paid sick leave in 2020 and an of six and a half days each. 2020 to restructure its workforce (which was in hat all employees of the age of 55, but below etire immediately should they choose to do so

PAYROLL ACCT.,2019 ED.(LL)-TEXT

19th Edition

ISBN:9781337619783

Author:BIEG

Publisher:BIEG

Chapter3: Social Security Taxes

Section: Chapter Questions

Problem 1MQ: _____1. Employees FICA tax rates A. Severance pay _____2. Form SS-4 B. By the 15th day of the...

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