Assume the facts as in E13.6 except that Matthewson SA has chosen (1) not to accrue paid sick leave until used and (2) (Compensated Absences) to accrue vacation time at expected future rates of pay without discounting. The company used the following projected rates to accrue vacation time.

Year in Which Vacation Time Was Earned Projected Future Pay Rates Used to Accrue Vacation Pay

2018...............................................................................................€12.90

2019................................................................................................13.70

Instructions

a. Prepare journal entries to record transactions related to compensated absences during 2018 and 2019.

b. Compute the amounts of any liability for compensated absences that should be reported on the statement of financial position at December 31, 2018, and 2019.