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An employee and employer cost-share 401(k) plan contributions, health insurance premium payments, and charitable donations. The employer also provides annual vacation compensation equal to ten days of pay at a rate of $30 per hour, eight-hour work day. The employee makes a gross wage of $3,000 monthly. The employee decides to use five days of vacation during the current pay period. Employees cover 30% of the 401(k) plan contribution and 30% of the health insurance premium. The employee also donates 1% of gross pay to a charitable organization. A. What would be the employee’s total benefits responsibility if the total 401(k) contribution is $700 and the health insurance premium is $260? B. Include the journal entry representing the payroll benefits accumulation for the employer in the month of March, if the employer matches the employee’s charitable donation of 1%.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 12, Problem 15EB
Textbook Problem
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An employee and employer cost-share 401(k) plan contributions, health insurance premium payments, and charitable donations. The employer also provides annual vacation compensation equal to ten days of pay at a rate of $30 per hour, eight-hour work day. The employee makes a gross wage of $3,000 monthly. The employee decides to use five days of vacation during the current pay period. Employees cover 30% of the 401(k) plan contribution and 30% of the health insurance premium. The employee also donates 1% of gross pay to a charitable organization.

A. What would be the employee’s total benefits responsibility if the total 401(k) contribution is $700 and the health insurance premium is $260?

B. Include the journal entry representing the payroll benefits accumulation for the employer in the month of March, if the employer matches the employee’s charitable donation of 1%.

To determine

(a)

Introduction:

Voluntary deductions refer to those deductions which are made only when employee designates deductions of such amounts. This includes health-care insurance, retirement contributions, pension funds, charitable contributions and such other benefits.

To compute:

Employee’s total benefits responsibility.

Explanation of Solution

Computation of employee’s total benefits responsibility:

Particulars Amount ($)
401(k) retirement contributions ($700×30%) 210
Health insurance premium ($26
To determine

(b)

To record:

Employer’s contribution for the month of March.

Introduction:

Financial statements are the financial performance indicator of a company which discloses the profits and losses of the company and the position of assets and liabilities of the company at the end of the year.

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Chapter 12 Solutions

Principles of Accounting Volume 1
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