Chapter 9, Problem 6SEB

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Chapter
Section

### College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

# SUTA taxes on July 31, 20--.WORKERS’ COMPENSATION INSURANCE AND ADJUSTMENT Columbia Industries estimated that its total payroll for the coming year would be $385,000. The workers’ compensation insurance premium rate is 0.2%.REQUIRED 1. Calculate the estimated workers’ compensation insurance premium and prepare the journal entry for the payment as of January 2, 20--. 2. Assume that Columbia Industries’ actual payroll for the year is$396,000. Calculate the total insurance premium owed and 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.

1.

To determine

Calculate the estimated workers’ compensation insurance premium and prepare the journal entry for the payment as of January 2, 20--.

Explanation

Calculate the estimated workersâ€™ compensation insurance premium.

Workmen'sÂ CompensationÂ InsuranceÂ ExpenseÂ }=(TotalÂ payrollÂ forÂ theÂ comingÂ year)Ã—(Workmen'sÂ CompensationÂ InsuranceÂ premiumÂ rateÂ )=$385,000Ã—0.2%=$770

Therefore, the estimated workersâ€™ compensation insurance premium is \$770

2.

To determine

Calculate the total insurance premium owed and prepare a journal entry as of December 31, 20--, to record the adjustment for the underpayment.

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