Reference no: EM132945267

Question - Bear Island Ltd has a weekly payroll of $300 000. The employees receive entitlements to two weeks' sick leave per year. The sick-leave entitlements are classified as non-vesting. Past experience, and experience within the industry, suggest that 60 per cent of employees will use their full two weeks' entitlement each year; 20 per cent of employees will take one week's sick leave each year; and 10 per cent of employees will take one day's sick leave each year.

REQUIRED -

a) Calculate the expected annual sick-leave expense for Bear Island Ltd (on the basis of average salaries).

b) Provide the journal entries necessary to recognise the sick-leave entitlement expense as it accrues.

c) Explain how your answer to part (a) and (b) above would change if:

i. The sick leave was vesting;

ii. The sick leave was non-cumulating and non-vesting.