Chapter 9, Problem 9SPA

### 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

# WORKERS’ COMPENSATION INSURANCE AND ADJUSTMENT Willamette Manufacturing estimated that its total payroll for the coming year would be $650,000. The workers’ compensation insurance premium rate is 0.3 %.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 Willamette Manufacturing’s actual payroll for the year was$672,000. 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. 3. Assume instead that Willamette Manufacturing’s actual payroll for the year was $634,000. 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. 1. To determine Calculate the estimated workers’ compensation insurance premium and prepare the journal entry for the payment as of January 2, 20--. Explanation Workmenâ€™s compensation insurance: Workmenâ€™s compensation insurance is provided to employees as a compensation for the illness or injury suffered by them during the work. The employer pays the full Workmenâ€™s compensation insurance amount to the workers. Calculate the estimated workersâ€™ compensation insurance premium and prepare the journal entry for the payment as of January 2, 20--. 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 )=$650,000Ã—0

2.

To determine

Calculate the total insurance premium owed and prepare a journal entry as of December 31, 20--.

3.

To determine

Prepare a journal entry as of December 31, 20--, for the total amount that should be refunded.

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