Waterway Industrieshas65employees who work 8-hour days and are paid hourly. On January 1, 2017, the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2017 may first be taken on January 1, 2018. Information relative to these employees is as follows:

YearHourly

WagesVacation Days Earned

by Each EmployeeVacation Days Used

by Each Employee2017$24.50

100201826.50108201929.501010

Waterwayhas chosen to accrue the liability for compensated absences at the current rates of pay in effect when the compensated time is earned.

What is the amount of expense relative to compensated absences that should be reported onWaterway's income statement for 2017?

$137800.

$0.

$153400.

$127400.