Assume the facts in the preceding exercise, except that Zeile 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
2014 $16.00
2015 18.50
Instructions
(a) Prepare journal entries to record transactions related to compensated absences during 2014 and 2015.
(b) Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2014, and 2015.