How Do You Calculate Accrued Vacation Pay?
Answers
Accrued vacation pay is the amount of vacation time that an employee has earned as per a company's employee benefit policy, but which has not yet been used or paid. This is a liability for the employer.
1.Calculate the amount of vacation time earned through the beginning of the accounting period. This should be a roll-forward balance from the preceding period. This information can be maintained in a database or electronic spreadsheet.
2.Add the number of hours earned in the current accounting period.
3.Subtract the number of vacation hours used in the current period.
4.Multiply the ending number of accrued vacation hours by the employee's hourly wage rate to arrive at the correct accrual that should be on the company's books.
5.If the amount already accrued for the employee from the preceding period is lower than the correct accrual, then record the difference as an addition to the accrued liability. If the amount already accrued from the preceding period is higher than the correct accrual, then record the difference as a reduction of the accrued liability.
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