Prepare a general fund journal entry to record the holiday

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Reference no: EM13598948

A city has adopted the following plan as to compensate time off:

• City employees are entitled to a specified number of days each year for holidays and vacation. The number depends on length of service (e.g., 20 days for employees with fewer than 5 years of service, 25 days for employees with fewer than 5 and 10 years, 30 days for employees over 10 years). Employees may accumulate up to 40 days, which they can carry over to future years, and they are compensated for unused days upon termination.

• Employees are also entitled to 7 sick days per year. They may carry over to future years up to 60 sick days, However, upon termination, they can be paid for no more than 20 unused days.
During 2013, the city paid employees $ 4.2 million for holidays and vacations during the year. Of this amount, $0.4 million was for days carried over from previous years. In addition, employees earned $0.5 million in time off that they expect to use, and for which they expect to be paid, in the future.

The city also paid $1.5 million in sick leave, none of which was paid to employees upon termination. Of this amount, $0.3 million was carried forward from previous years. The city estimates that employees earned an additional $0.8 million in unused sick leave. Of this, $0.5 million will eventually be paid for as time off, $0.2 million will be paid upon termination, and $0.1 million will lapse.

1. Prepare a general fund journal entry to record the holiday and vacation compensation. Indicate the amount of any other liability that would be recorded on both the government-wide statements and schedule of long-term obligations.

Reference no: EM13598948

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