E13-5B (Compensated Absences) Zeile Company began operations on January 2, 2013. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 paid sick days annually. Vacation days may be taken after J

E13-5B (Compensated Absences) Zeile Company began operations on January 2, 2013. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 10 paid vacation days and 6 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

         2013       2014        2013                  2014        2013                2014

        $15            $18           0                        9              4                     5

Zeile Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the

period when earned and to accrue sick pay when earned.

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.