Pirate Ltd employs 5 staff. Each staff member is entitled to 20 days annual leave per annum. Leave loading of 17.5% is paid when the leave is taken. At 1 July 2013 the balance in the provision for annual leave account was $20 303.
Details of each employees leave entitlement at 30 June 2014 are as follows:

There are 260 work days in a year. On 1 July each year all employees receive a 5% wage rise. There are no other wage rises given during the year.
Annual leave payments made during the year were debited against the provision account. The total debit against the annual leave account during the year in relation to leave taken was:

Question

Pirate Ltd employs 5 staff. Each staff member is entitled to 20 days annual leave per annum. Leave loading of 17.5% is paid when the leave is taken. At 1 July 2013 the balance in the provision for annual leave account was $20 303.
Details of each employees leave entitlement at 30 June 2014 are as follows:

There are 260 work days in a year. On 1 July each year all employees receive a 5% wage rise. There are no other wage rises given during the year.
Annual leave payments made during the year were debited against the provision account. The total debit against the annual leave account during the year in relation to leave taken was:

Quizplus · Accepted Answer

To calculate the total debit against the annual leave account during the year in relation to leave taken, we need to first find the total number of leave days taken by all employees.

Total leave days taken = (20 days x 5 employees) = 100 days

Next, we need to calculate the total cost of annual leave payments made during the year, including the leave loading.

Total cost of annual leave payments = (100 days x $230 per day x 1.175 (to include the 17.5% leave loading)) = $27,062.50

However, we also need to factor in the 5% wage rise that was given to all employees on 1 July 2014. This means that the cost of annual leave payments made during the year would have been slightly higher.

Total cost of annual leave payments with 5% wage rise = ($27,062.50 x 1.05) = $28,415.63

Finally, we need to add this amount to the balance in the provision for annual leave account at the beginning of the year, and then subtract the balance in the provision for annual leave account at the end of the year.

Total debit against the annual leave account during the year = ($20,303 + $28,415.63 - $15,133) = $33,585

Therefore, the correct answer is C.

Pirate Ltd Employs 5 Staff