All paid time off may not be the same.

A city has adopted the following plan for compensated time off:

• City employees are entitled to a specified number of days each year for holidays and vacation. The number depends on length of service (20 days for employees with fewer than 5 years of service, 25 days for employees with between 5 and 10 years, 30 days for employees with more than 10 years). Employees may accumulate up to 40 days, which they can either carry over to future years or be compensated for on termination.
• Employees are also entitled to 7 sick days per year. They may carry over to future years up to 60 sick days.

However, upon termination they can be paid for no more than 20 unused days.

During 2021, the city paid employees $4.2 million for holidays and vacations during the year. Of this amount, $0.4 million was for days carried over from previous years. In addition, employees earned $0.5 million in time off that they expect to use, and be paid for, in the future.

The city also paid $1.5 million in sick leave, none of which was paid to employees on termination. Of this amount, $0.3 million was carried forward from previous years. The city estimates that employees earned an additional $0.8 million in unused sick leave. Of this, $0.5 million will eventually be paid for as time off, $0.2 million will be paid on termination, and $0.1 million will lapse.

1. Prepare, a general fund journal entry to record the holiday and vacation compensation. Indicate the amount of any other liability that would be recorded on both the governmentwide statements and the schedule of longterm obligations.
2. Do the same for the sick leave.
3. Justify any differences between the two sets of entries.
4. Suppose additionally that for the first time in 2021 the city offered up to eight weeks of paid maternity leave to eligible employees. In 2021, the city paid $0.2 million to employees on leave. In addition, employees earned an estimated $0.3 million in leave to be taken in the future. Consistent with your previous entries and justifications, explain how (and why) you would account for this leave (which is not specifically addressed by current G.A.S.B. pronouncements).