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Simson Company has 35 employees who work 8-hour days and are paid hourly.On January 1, 2006, the company began a program of granting its employees 10 days of paid vacation each year.Vacation days earned in 2006 may first be taken on January 1, 2007.Information relative to these employees is as follows: $\begin{array}{rrrr}
& \text { Hourly } & \text { Vacation Days Earned } &\text { Vacation Days Used}\
\text { Year } & \text { Wages } & \text { by Each Employee }&\text {by Each Emplovee }\\hline
2006 & \$ 25.80 & 10 & 0 \
2007 & 27.00 & 10 & 8 \
2008 & 28.50 & 10 & 10
\end{array}$ Simson has chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned.
-What is the amount of the accrued liability for compensated absences that should be reported at December 31, 2008?
A)$94,920.
B)$90,720.
C)$79,800.
D)$95,760.

Question

Use the following information for questions 
Simson Company has 35 employees who work 8-hour days and are paid hourly.On January 1, 2006, the company began a program of granting its employees 10 days of paid vacation each year.Vacation days earned in 2006 may first be taken on January 1, 2007.Information relative to these employees is as follows: $\begin{array}{rrrr}
& \text { Hourly } & \text { Vacation Days Earned } &\text { Vacation Days Used}\
\text { Year } & \text { Wages } & \text { by Each Employee }&\text {by Each Emplovee }\\hline
2006 & \$ 25.80 & 10 & 0 \
2007 & 27.00 & 10 & 8 \
2008 & 28.50 & 10 & 10
\end{array}$ Simson has chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned.
-What is the amount of the accrued liability for compensated absences that should be reported at December 31, 2008?
A)$94,920.
B)$90,720.
C)$79,800.
D)$95,760.

Quizplus · Accepted Answer

The accrued liability for compensated absences is the amount of wages that the company owes to its employees for vacation days that have been earned but not yet taken. The liability is calculated by multiplying the number of vacation days earned by the hourly wage rate in effect when the vacation days were earned. In this case, the company has 35 employees who each earned 10 vacation days in 2006 and 2007, and 10 vacation days in 2008. The hourly wage rate in effect when the vacation days were earned was $25.80 in 2006, $27.00 in 2007, and $28.50 in 2008. Therefore, the accrued liability for compensated absences at December 31, 2008 is:(35 employees x 10 vacation days x $25.80) + (35 employees x 10 vacation days x $27.00) + (35 employees x 10 vacation days x $28.50) = $94,920

Use the Following Information for Questions Simson Company Has

Use the Following Information for Questions
Simson Company Has