Tunacliff Mowers allows each employee to earn 15 paid vacation days each year with full pay while on vacation. Unused vacation time can be carried over to the next year; if not taken during the next year it is lost. By the end of 1998, all but 3 of the 30 employees had taken their earned vacation time; these three carried over to 1999 a total of 20 vacation days, which represented 1998 salary of $6,000. During 1999, each of these three used their 1998 vacation carryover; none of them had received a pay rate change from 1998 to the time they used their carryover. Total cash wages paid: 1998, $700,000; 1999, $740,000. There was no carryover of vacation time earned in 1999.
Required:
1. Give all of the entries for Tunacliff related to vacations during 1998 and 1999. Disregard payroll taxes.
2. Compute the total amount of wage expense for 1998 and 1999. How would the vacation time carried over from 1998 affect the 1998 balance sheet?