Question
1 views

Willamette Manufacturing estimated that its total payroll for the coming year would be \$670,000. The workers' compensation insurance premium rate is 0.3%.

Required:

1.  Calculate the estimated workers' compensation insurance premium.
\$

Prepare the journal entry for the payment as of January 2, 20--.

Page:
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF.
DEBIT CREDIT
1 20--
Jan. 2
1
2             2
3   Paid estimated workers' compensation insurance premium         3

2.  Assume that Willamette Manufacturing's actual payroll for the year was \$694,000. Calculate the total insurance premium owed.
\$

Prepare a journal entry as of December 31, 20--, to record the adjustment for the underpayment. The actual payment of the additional premium will take place in January of the next year.

Page:
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF.
DEBIT CREDIT
1 20--
Dec. 31
1
2             2

3.  Assume instead that Willamette Manufacturing's actual payroll for the year was \$660,000. Prepare a journal entry as of December 31, 20--, for the total amount that should be refunded. The refund will not be received until the next year.

Page:
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF.
DEBIT CREDIT
1 20--
Dec. 31
1
2             2
check_circle

Step 1

The insurance expense for estimated compensation of \$670,000 is \$2,010 computed by multiplying estimated compensation, \$670,000 with the premium percentage of 0.30%.

The insurance expense for estimated compensation of \$690,000 is \$2,082 computed by multiplying estimated compensation, \$694,000 with a premium percentage of 0.30%.

The insurance expense for estimated compensation of \$660,000 is \$1,980 computed by multiplying estimated compensation, \$660,000 with a premium percentage of 0.30%.

Step 2

In the above entry, the workmen compensation insurance premium account of \$2,010 is debited and a bank account of \$2,010 is credited to record the estimated compensation insurance premium.

Step 3

In the above entry, there is a debit to workmen compensation insurance premium as an additional compensation obtained by reducing insurance expense \$2,010 from \$2,082 and a credit to Workmen compensation insurance payable to record the insurance premium payab...

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in