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Employees at Rayon Enterprises earn one day a month of vacation compensation (twelve days total each year). Vacation compensation is paid at an hourly rate of $45, based on an eight-hour work day. Rayon’s first pay period is January. It is now April 30, how much vacation liability has accumulated if the company has four employees and no vacation compensation has been paid? A. $1,440 B. $4,320 C. $5,760 D. $7,200

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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Section
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 12, Problem 18MC
Textbook Problem
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Employees at Rayon Enterprises earn one day a month of vacation compensation (twelve days total each year). Vacation compensation is paid at an hourly rate of $45, based on an eight-hour work day. Rayon’s first pay period is January. It is now April 30, how much vacation liability has accumulated if the company has four employees and no vacation compensation has been paid?

A. $1,440

B. $4,320

C. $5,760

D. $7,200

To determine

Concept introduction:

Vacation Compensation is the amount of the wages paid for the allowed leaves not taken by the employees during the period. The company needs to prepare the production for the unpaid amount of the Vacation Compensation at the end of the period.

To choose:

The amount of vacation compensation.

Explanation of Solution

The amount vacation compensation is calculated as follows:

Number of employees = 4

Number of vacations per employee = 1day x 4 months = 4

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Chapter 12 Solutions

Principles of Accounting Volume 1
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