Goldwing Corporation offers enriched parental benefits to its staff. While the government provides compensation based on Employment Insurance legislation for a period of 12 months, Goldwing increases the amounts received and extends the period of compensation. The benefit program tops up the amount received to 100% of the employee's salary for the first 12 months, and pays the employee 75% of his or her full salary for another six months after the Employment Insurance payments have ceased.
Zeinab Jolan, who earns $54,000 per year, announced to her manager in early June 2011 that she was expecting a baby in mid-November. On October 29, 2011, nine weeks before the end of the calendar year and Goldwing's fiscal year, Zeinab began her 18-month maternity leave. Assume that the Employment Insurance program pays her a maximum of $720 per week for 52 weeks.
Round all answers to the nearest dollar.
(a) Prepare all entries that Goldwing Corporation must make during its 2011 fiscal year related to the maternity benefits plan in regard to Zeinab Jolan. Be sure to include the date of each entry.
(b) Prepare one entry to summarize all entries that the company will make in 2012 relative to Zeinab Jolan's leave.
(c) Calculate the amount of maternity benefits payable at December 31, 2011 and 2012. Explain how these amounts will be shown on the company's balance sheet.