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 employee's 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.
The closing balance in the provision for annual leave account at 30 June 2014 is:

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 employee's 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.
The closing balance in the provision for annual leave account at 30 June 2014 is:

Quizplus · Accepted Answer

Total annual leave entitlement for all employees = 5 staff × 20 days = 100 days
Total cost of annual leave including loading = 100 days × 1.175 × (1/260) × (1 + 0.05) = $4 292.31
Provision for annual leave as at 30 June 2013 + cost of annual leave = $20 303 + $4 292.31 = $24 595.31
Less provision for annual leave as at 30 June 2014 = $24 595.31 – $1 509.31 = $23 086
Therefore, the closing balance in the provision for annual leave account at 30 June 2014 is $23,086. Choice C is the correct answer.

Pirate Ltd Employs 5 Staff