Ayayai Corporation offers enriched parental benefits to its staff. While the government provides compensation based on Employment Insurance legislation for a period of 12 months, Ayayai increases the amounts received and extends the period of compensation. The benefits program tops up the amount received to 100% of the employee’s salary for the first 12 months and pays the employee 70% of his or her full salary for another 6 months after the EI payments have stopped.
Zeinab Jolan, who earns $52,000 per year, announced to her manager in early June 2020 that she was expecting a baby in mid-November. On October 29, 2020, 9 weeks before the end of the calendar year and Ayayai’s fiscal year, Zeinab applied for and began her 18-month maternity leave. Assume that the Employment Insurance program pays her a maximum of $720 per week for 52 weeks.
For the purpose of this question, ignore any tax, CPP, and EI deductions when making payments to Zeinab.

A.) Prepare all entries that Ayayai Corporation must make during its 2020 fiscal year related to the parental benefits plan in regard to Zeinab Jolan.

Date	Account Titles and Explanation	Debit	Credit
(Blank)
	To record employee benefit expense
	To record payment of parental leave benefits for one week

B.) Prepare one entry to summarize all entries that the company will make in 2021 relative to Zeinab Jolan’s leave.

Account Titles and Explanation	Debit	Credit

C.) Calculate the number of parental benefits payable on December 31, 2020, and 2021.

		2020		2021
Parental Leave Benefits Payable		$		$

Explain how these amounts will be shown on Ayayai’s SFP. (Round answers to 0 decimal places, e.g. 5,275.)

		2020		2021
Current liability		$		$
Long-term liability		$		$

Answer rating: 100% (QA)

Solution A Prepare all entries that Ayayai Corporation must make during its 2020 fiscal year related ... View the full answer