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 2016 the accumulated untaken leave was 14 days in total. During the year ended 30 June 2017 a total of 50 days sick leave was taken, of which 12 days were unpaid leave.
Of the accumulated untaken leave at 30 June 2017 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 2017 is:

Question

Quizplus · Accepted Answer

The provision for sick leave is calculated as follows:
- 6 employees x $750 per week x 8 days sick leave per employee = $36,000 total sick leave entitlement for the year
- Less: Accumulated untaken leave at 1 July 2016 = 14 days x $750 = $10,500
- Plus: Additional sick leave entitlement for the year = $36,000 - $10,500 = $25,500
- Less: Sick leave taken during the year = 50 days x $750 = $37,500
- Add back: Unpaid leave taken during the year = 12 days x $750 = $9,000
- Less: Estimated sick leave to be taken in the following year = 14 days x 75% (or 0.75) x $750 = $7,875

So, the balance of the provision for sick leave at 30 June 2017 is:
$25,500 - $37,500 + $9,000 - $7,875 = $2700. Therefore, the correct answer is choice C) $2700.

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