Refer to the data in E13.11 and assume instead that Mustafa Limited has chosen not to recognize paid sick leave until it is used, and has chosen to accrue vacation time at expected future rates of pay without discounting. Mustafa uses the following projected 

Instructions 

a. Prepare the journal entries to record the transactions related to vacation entitlement during 2019 and 2020. 

b. Prepare the journal entries to record the transactions related to sick days during 2019 and 2020. 

c. Calculate the amounts of any liability for vacation pay and sick days that should be reported on the SFP at December 31, 2019 and 2020. 

Data From E13.11.

Mustafa Limited began operations on January 2, 2019. Mustafa employs nine individuals who work eight-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: 

Mustafa Limited has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when they are earned and to accrue sick pay when it is earned. For the purpose of this question, ignore any tax, CPP, and EI deductions when making payments to the employees.

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Projected Future Pay Rates Used to Accrue Vacation Pay Year in Which Vacation Time Was Earned 2019 $20.75 per hour 2020 $21.60 per hour