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Silver Ltd. has 35 employees who work 8-hour days and are paid hourly. On January 1, 20×7, the company began a program of granting its employees 10 days paid vacation each year. Vacation days earned in 20×7 may be taken starting on January 1, 20×8. Information relative to these employees is as follows:

                                Hourly           Vacation Days Earned       Vacation Days Used

Year                        Wages               by Each Employee             by Each Employee

20×7            $12.6               10                  0

20×8             13.4               10                  6

20×9             14.3               10                 10

Silver has chosen to accrue the liability for compensated absences (vacation pay) at the current rates of pay in effect when the vacation pay is earned.

What is the amount of vacation pay expense that should be reported on Silver’s income statement for 20×7?