a) Blue-sky Limited pays wages & salaries to its employees fortnightly in arrears. The next pay day is 2 July 2019. The fortnightly salary expense is $60,000, of which $20,000 is deducted as PAYE tax. The company makes payments to the Inland Revenue Department (IRD) against this PAYE tax on every second Monday, with the next payment being made on Monday 6 July 2019. Blue-sky Limited’s reporting period ends on 30 June 2019.

Required:

Provide the necessary journal entries in the books of Blue-sky Limited:

i.) to recognize wages & salaries expenses

ii.) when the wages & salaries amount is ultimately paid to employees, and

iii.) when the amount is paid to the IRD.

b) Albany Limited is a newly formed company and is formulating its policies in terms of employee benefits. The CEO of the company proposed that it should offer employees payment for any accumulated unused sick leave if they resign from the company.

Required:

Using proper Memorandum formatting, explain to the CEO the effect on the financial statements:

i.) if the proposed unused sick leave policy is approved by the board; and

ii.) if they offer employees a non-vesting sick leave entitlement.

Answer rating: 100% (QA)

a i Bluesky Limited Journal Entry to recognize Wages Salaries expense Date 30 June 2019 Description ... View the full answer