Compute and Record Workers' Compensation Insurance Premiums for Beverly Manufacturing

question 62

Essay

Compute and record workers' compensation insurance premiums for Beverly Manufacturing as follows:
1.The firm estimates that its office employees will earn $40,000 next year and its factory employees will earn $172,000.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:

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than its competitors.

Two Goods

A scenario in economics discussing the trade-off or choice between two different products or commodities.

Specialization

The process in which individuals or entities focus on a narrow area of expertise or production, leading to increased efficiency and productivity.

Absolute Advantage

Absolute advantage refers to the ability of a country, company, or individual to produce a good or service more efficiently than competitors, using the same amount of resources.