Shamrock Company began operations on January 2, 2016. It employs 10 individuals who work 8-hour days and are paid hourly. Each employee earns 11 paid vacation days and 7 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. Actual Hourly Vacation Days Used Sick Days Used
Wage Rate by Each Employee by Each Employee
2016 2017 2016 2017 2016 2017
$11 $120 1 0 4 6
Shamrock 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
2016 $11.83
2017 12.76
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.