Tunacliff Mowers allows each employee to earn 15 fully paid vacation days each year. Unused vacation time can be carried over to the next year; if not taken during the next year, it is lost. By the end of 20X5, all but 3 of the 30 employees had taken their earned vacation time; these 3 carried over to 20X6 a total of 20 vacation days. These 20 days represented total 20X5 salary of $6,000. During 20X6, each of these three used their 20X5 vacation carryover; none of them had received a pay rate change from 20X5 to the time they used their carryover. Total cash wages paid: 20X5, $700,000; 20X6, $740,000.

Required:
1. Give the entries for Tunacliff related to vacations during 20X5 and 20X6. Disregard payroll taxes.
2. Compute the total amount of wage expense for 20X5 and 20X6.
3. Show the appropriate statement of financial position presentation in 20X5 for the vacation carryover balances. How would the vacation time carried over from 20X5 affect the retained earnings?