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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

The adjusting entry for expired workers’ compensation premium is _____.

  1. a. Workers’ Compensation Insurance Payable DR; Cash CR
  2. b. Cash DR; Workers’ Compensation Insurance Expense CR
  3. c. Workers’ Compensation Insurance Expense DR; Prepaid Insurance CR
  4. d. Prepaid Insurance DR; Workers’ Compensation Insurance Expense CR
  5. e. Workers’ Compensation Insurance Expense DR; Cash CR

To determine

Provide the adjusting entry for the expired worker’s compensation premium.

Explanation

Workers compensation insurance premium: Workers compensation insurance premium are usually paid in advance based on their estimated payroll during the period. The premium rate that is provided to the employees is based on company’s claim history, percentage of payroll, job classification and the risk level of the job.

When workers compensation insurance premium gets expired the employer closes the account by passing adjusting entry during the end of the period. The adjusting entry made for workers compensation insurance premium expiry is as follows:

DateAccount Title and explanationDebit ($)

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