Reference no: EM131704061

Question: (Adjusting for accrued vacation leave in government-wide financial statements) Sophie County allows its employees to earn 10 days of vacation leave every year. It also allows employees to accumulate vacation leave and to receive cash for up to 20 days of leave on termination or retirement. Sophie's annual appropriations for salaries include salaries plus a provision for cashed-out vacation leave payments to be made to those who are likely to retire during the year. However, Sophie does not make an appropriation for the accumulating vacation leave liability. In its government-wide financial statements for the year ended December 31, 2012, Sophie reported a liability of $215,000 for the accumulating vacation leave liability. Sophie's finance officer estimated this liability to be $285,000 as of December 31, 2013. Prepare journal entries needed to adjust Sophie's 2013 fund financial statements(FSs) so government-wide statements can be prepared.