How do you calculate accrued vacation pay?

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 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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The calculation of accrued vacation pay for each employee is:

Calculate the amount of vacation time earned through the beginning of the accounting period. ...

Add the number of hours earned in the current accounting period.

Subtract the number of vacation hours used in the current period.