Prepare journal entries to record transactions related to

Reference no: EM13482678

Mathewson Company began operations on January 2, 2010. Itemploys 20 individuals who work 8-hour days and are paid hourly. Each employee earns 22 paid vacation days and 13 paid sick daysannually. Vacation days may be taken after January 15 of the yearfollowing the year in which they are earned. Sick days may be takenas soon as they are earned; unused sick days accumulate. Additional information is as follows.

Actual Hourly		Vacation Days Used		Sick Days Used
WageRate		by EachEmployee		by EachEmployee
2010	2011	2010	2011	2010	2011
$26	$30	0	20	9	11

Mathewson Company has chosen not to accrue paid sick leave untilused, and has chosen to accrue vacation time at expected futurerates of pay without discounting. The company used the followingprojected rates to accrue vacation time.

Years inWhich Vacation Time Was Earned	ProjectedFuture Pay Rates Used to Accrue Vacation Pay
2010	$28
2011	30

(a) Prepare journal entries to record transactions related to compensated absences during 2010 and 2011

(b) Compute the amounts of any liability forcompensated absences that should be reported on the balance sheet at December 31, 2010, and 2011.

Reference no: EM13482678

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