Compute and Record Workers' Compensation Insurance Premiums for Fairlawn Manufacturing

question 27

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 2013. On page 9 of a general journal, record the payment of the estimated premium. Date the entry January 12, 2013.
2. On January 3, 2014, an audit of the firm's payroll records for 2013 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 2013. Date the entry December 31, 2013.

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Definitions:

Anticipates Problems

The ability to foresee potential issues or obstacles and plan strategies to avoid or mitigate them effectively.

Opportunities

Situations or conditions that present a path to gain or achieve something beneficial.

Effectively

In a manner that achieves a desired result efficiently and successfully.

Organizational Pressure

The internal or external forces that influence the behaviors and decisions of individuals within a company.