Bratt Moderick Company began operations on January 3, 2014. It employs 8 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

2014 2015 2014 2015 2014 2015

$11 $13 0 8 3 7

Bratt Moderick 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 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