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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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All of Rolf Co.’s employees are entitled to two weeks of paid vacation for each full year in Rolf’s employ. Unused vacation time can be accumulated and carried forward to succeeding years and will be compensated at the salary in effect when the vacation is taken. Mary Beal started her employment with Rolf on January 1, 2019. As of December 31, 2019, when Beal’s salary was $500 per week, Beal had used none of her vacation time. As of December 2019, Rolf expects to give its employees 10% raises in July 2020. How much should Rolf report as a liability at December 31, 2019, for Beal’s accumulated vacation time?

  1. a. $0
  2. b. $500
  3. c. $1,000
  4. d. $1,100

To determine

Identify the amount of liability that should be reported by Corporation R for Person B’s accumulated vacation time.

Explanation

Vacation Pay Liability:

Vacation pay is a benefit paid by the employers for the full-time employees that allows the employees to take the salaried vacation.

Calculate the amount of vacation pay liability:

Vacation pay liability=Number of weeks×Salary per week=

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