A city has adopted the following plan for compensated time

A city has adopted the following plan for compensated time off:• City employees are entitled to
a specified number of days each year for holidays and vacation. The number depends on length
of service (20 days for employees with fewer than 5 years of service, 25 days for employees
with between 5 and 10 years, 30 days for employees with more than 10 years). Employees may
accumulate up to 40 days, which they can either carry over to future years or be compensated
for on termination.• Employees are also entitled to 7 sick days per year. They may carry over to
future years up to 60 sick days. However, upon termination they can be paid for no more than
20 unused days. During 2018 the city paid employees $4.2 million for holidays and vacations
during the year. Of this amount, $0.4 million was for days carried over from previous years. In
addition, employees earned $0.5 million in time off that they expect to use, and be paid for, in
the future.The city also paid $1.5 million in sick leave, none of which was paid to employees on
termination. Of this amount, $0.3 million was carried forward from previous years. The city
estimates that employees earned an additional $0.8 million in unused sick leave. Of this, $0.5
million will eventually be paid for as time off, $0.2 million will be paid on termination, and $0.1
million will lapse.1. Prepare a general fund journal entry to record the holiday and vacation
compensation. Indicate the amount of any other liability that would be recorded on both the
government?wide statements and the schedule of long?term obligations.2. Do the same for the
sick leave.3. Justify any differences between the two sets of entries.4. Suppose additionally that
for the first time in 2018 the city offered up to eight weeks of paid maternity leave to eligible
employees. In 2018 the city paid $0.2 million to employees on leave. In addition, employees
earned an estimated $0.3 million in leave to be taken in the future. Consistent with your
previous entries and justifications, explain how (and why) you would account for this leave
(which is not specifically addressed by current GASB pronouncements).View Solution: A city
has adopted the following plan for compensated time
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