Reference no: EM131339693
Employees of the City of Hastings are paid from the general fund semi-monthly on the 15th day and the last day of the month. The City provides numerous employee benefits. Employees earn ten vacation days for each 12 months of employment. The employee can take the vacation during any summer months (May-September) prior to retirement. The employees also earn one sick day for each month of employment. Sick pay vests at the completion of five years of continuous service. Vested unused sick pay will be paid upon retirement or termination. The City contributes to a retirement plan that is administered by the State. Each year the City gets a statement from the State explaining the actuarially determined contribution required.
The City recognizes revenues/expenditures when collected/paid or if collected/paid within 60 days of year-end. The City’s fiscal year end is December 31. At the beginning of the current year employees had $.4 million of earned vacation time and $7 million of vested earned sick leave. The City uses the FIFO method of accounting for vacation and sick days.
REQUIRED:
Assuming that the City maintains its books and records in a manner to facilitate the preparation of its fund financial statements, record the following transactions related to employee salaries and benefits. Be sure to make ALL necessary entries.
a. During the year employees of the City earned $60 million. At year-end all but $2 million had been paid to the employees.
b. During the year the employees of the City earn $2.5 million in vacation pay. By year-end the employees had taken $2 million of vacation. Of the balance of vacation pay due to the employees, the City estimates that $.3 million will be taken during the next year and $.2 million will be deferred until later.
c. During the year the employees of the City earned $3 million in sick pay, of which $2.5 million is expected to vest. Of the 2.5 million, employees are expected to take $2.0 million and $.5 million is expected to be paid to employees upon their termination or retirement. During the year employees took $1 million in sick days.
d. The City received a statement from the State requiring a contribution to the Retirement Plan of $8 million for the current year. Because of a cash shortage the City paid $6 million of the required contribution during the year, $1.5 million on February 15 of the following year and $.5 million in June of the following year.
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