Carpenter Ltd has 6 employees, who are each paid $750 per week for a 5 day working week. Each employee is entitled to 8 days accumulating non-vesting sick leave per year.
At 1 July 2013 the accumulated untaken leave was 14 days in total. During the year ended 30 June 2014 a total of 50 days sick leave was taken, of which 12 days were unpaid leave.
Of the accumulated untaken leave at 30 June 2014 it is estimated that 75% of it will be taken during the following year.
The balance of the provision for sick leave at 30 June 2014 is:

Question

Quizplus · Accepted Answer

To calculate the balance of the provision for sick leave at 30 June 2014 we need to follow these steps:

1. Calculate the total sick leave entitlement for the 6 employees:
   6 employees x 8 days per employee = 48 total sick leave entitlement

2. Add the accumulated untaken leave at 1 July 2013:
   48 entitlement + 14 accumulated untaken leave = 62 total sick leave available

3. Subtract the sick leave taken during the year ended 30 June 2014:
   62 total sick leave available - 50 sick leave taken = 12 sick leave remaining

4. Adjust for unpaid leave:
   12 sick leave remaining - 12 unpaid leave taken = 0 sick leave remaining

5. Estimate sick leave to be taken during the following year:
   14 accumulated untaken leave x 75% estimated to be taken = 10.5 sick leave to be taken

6. Calculate the balance of the provision for sick leave:
   10.5 sick leave - $750 per employee x 6 employees = $2700

Therefore, the best choice is C) $2700.

Carpenter Ltd Has 6 Employees, Who Are Each Paid $750