Additional Problem 22

Stapleton and Sons is a business that employs five full-time staff. Under their employment contract, each staff is entitled to ten days of sick leave each year, provided sufficient medical certificates or similar documents are produced to confirm their ill health. Past experience and records indicate that staff use 70% of their sick leave each year. Staff work a five day week (Monday to Friday), and are paid a salary of $52,000 each per year. The business records wages and relevant leave entitlements on a weekly basis.

Required:

1. Should Stapleton and Sons record any provision for their employees' sick leave? Explain and justify your answer with reference to the AASB Framework and Accounting Standards where relevant.
2. Calculate the annual sick leave obligation for Stapleton and Sons, and provide the general journal entries necessary to record the wages paid and leave provision for one week.