Assume the facts in E13-3 except that Matt Broderick Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates of pay without discounting. The company used the following projected rates to accrue vacation time.

Year in Which Vacation Time Was Earned	Projected Future Pay Rates Used to Accrue Vacation Pay
2016	\(10.75
2017	\)11.60

Instructions

(a) Prepare journal entries to record transactions related to compensated absences during 2016 and 2017.

(b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2016, and 2017.

Date

Accounts and Explanation

Debit $

Credit $

Salaries expenses

$7,740

Salaries payable$(9\mathrm{employees}\times 10\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}10.75)$

$7,740

(To record the accrual of vacation salary)

Salaries expenses

$2,880

Cash$(9\mathrm{employees}\times 4\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}10)$

$2,880

(To record the sick leaves used)

Salaries expenses

$8,352

Salaries payable$(9\mathrm{employees}\times 10\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}11.60)$

$8,352

(To record the accrual of vacation salary)

Salaries expenses$(9\mathrm{employees}\times 5\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}11)$

$3,960

Cash

$3,960

(To record the sick leaves used)

Salaries and wages expenses$(\mathrm{\$}7,128-\mathrm{\$}6,966)$

$162

Salaries and wages payable$(9\mathrm{employees}\times 9\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}10.75)$

$6,966

Cash$(9\mathrm{employees}\times 9\mathrm{days}\times 8\mathrm{hours}\times \mathrm{\$}11)$

$7,128

(To record the vacation time paid)

Particular

2016

2017

Balance on 1 Jan

0

$7,740

Accrued

$7,740

8,352

Less: Paid

0

(6,966)

Balance on 31 Dec

$7,740

$9,126