The Allendale School District recently signed a contract with its teachers' union. The contract provides that all teachers will receive a one-semester sabbatical leave after seven continuous years of employment. The preamble to the contract provision stresses that the leave is intended for ''renewal, additional education, and academic enrichment.'' It provides examples of the types of activities it is intended to promote: formal post-baccalaureate courses, service with public or not-for-profit organizations, and independent study and research.

The contract indicates that the leave is guaranteed to all teachers who satisfy the time in service and other specified criteria. Although teachers must apply for the leave, the district is required to approve it if the criteria are met. If a teacher opts not to take the leave after seven years, then he or she may accumulate it and either take it in the future or receive payment for it upon retirement. Teachers do not have to report to the school officials either on what they plan to accomplish while on leave or what they actually accomplished. School officials estimate that the new sabbatical pro vision will add to its annual compensation costs approximately $3,000 per currently employed teacher per year (after taking account of teachers who will never satisfy the leave criteria). The district currently employs 2,500 teachers. The program will be phased in gradually; the first teachers will be eligible to take their leaves in seven years. Another school district, the Balcones West School District, which is not unionized, adopted a similar sabbatical program the same year. However, the Balcones West program does not guarantee teachers a leave. Instead they must be granted the leave on the basis of an interview and lengthy application, which includes a schedule of planned activities. Teachers who win approval for the leave must agree to work for the district for at least one year subsequent to the leave. If they fail to return to the district, they will be required to reimburse the district for salary and benefits received while on leave. Moreover, they must submit a written report to the district on their accomplishments during the leave. Balcones West officials estimate that the cost of its leave will be approximately $2,000 per currently employed teacher per year. The district currently employs 1,000 teachers. As with the Allendale district, the program will be phased in gradually and the first teachers will be eligible for leaves in seven years. Prepare any entries that you would recommend that (1) the Allendale District and (2) the Balcones West District prepare in the first year after adopting their sabbatical programs. Specify the fund in which your entries would be made. Explain and justify your answers, citing relevant accounting standards.