Sycamore Ltd. began operations on January 2, 2020. The company employs 10 people who work 8-hour days. Each employee earns 10 paid sick days annually. The sick days accumulate, are vested, and can be carried forward. The average hourly wage rate was $ 20.00 in 2020 and $ 21 in 2021. The average number of sick days used by each employee in 2020 was 8. Sycamore accrues the cost of compensated absences at rates of pay in effect when the absences are expected to be taken.

Required:

1. Record the adjusting entry for 2020 to accrue the compensated absence.
2. Assume that the sick days do not vest, and are accumulated. Discuss the accounting issue which this presents.