Monty Company began operations on January 2, 2019. It employs 11 individuals who work 8-hour days and are paid hourly. Each employee earns 11 paid vacation days and 8 paid sick days annually. Vacation days may be taken after January 15 of the year following the year in which they are earned. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows. (To record payment for compensated time when used by employees) Actual Hourly Vacation Days Used Sick Days Used
Wage Rate by Each Employee by Each Employee
2013 2014 2013 2014 2013 2014
$10 $11 0 9 4 5
Assume the facts in E13-5 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 Projected Future Pay Rates
Time Was Earned Used to Accrue Vacation Pay
2013 $10.75
2014 11.60
Instructions:
(a) Prepare journal entries to record transactions related to compensated absences during 2013 and 2014.
(b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2013, and 2014.