Compute and Record Workers' Compensation Insurance Premiums for Fairlawn Manufacturing

question 66

Essay

Compute and record workers' compensation insurance premiums for Fairlawn Manufacturing as follows:
1.The firm estimates that its office employees will earn $46,000 next year and its factory employees will earn $162,000.The firm pays the following rates for workers' compensation insurance: $0.40 per $100 of wages for the office employees and $3.50 per $100 of wages for the factory employees.Compute the estimated premiums for 2016.On page 9 of a general journal,record the payment of the estimated premium.Date the entry January 12,2016.
2.On January 3,2017,an audit of the firm's payroll records for 2016 showed that the firm had actually paid wages of $48,000 to its office employees and $165,000 to its factory employees.Compute the actual premium for the year and the balance due the insurance company or the credit due the firm.In the general journal,record the entry to adjust the Workers' Compensation Insurance Expense as of the end of 2016.Date the entry December 31,2016.

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Definitions:

Employers

Individuals or entities that hire others to perform services or jobs in exchange for compensation.

Welfare Capitalism

An economic system that combines a predominantly market-based economy with extensive social welfare programs.

Unionization

The process by which workers form or join a union to collectively negotiate with their employer regarding wages, working conditions, and other employment terms.

Intimidation

The act of threatening or coercing someone into doing or not doing something, often used in contexts of labor disputes or competitions to unduly influence parties.