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PRE Home New Tab O https Q Search h 10-1 Help Save a Problem 11.6A Computing and recording workers\' compensation insurance premiums. LO 11-8 The following information relates to Ponte Manufacturing Company\'s workers compensation insurance premiums for 2019 On January 15, 2019, the company estimated its premium for workers\' compensation insurance for the year on the basis of that data ansificati Offiee vork Shop work Estinated Insurance Wages Rates 52,000 0.40/6100 296,000 .00/8100 Required: 1. Compute the estimated premiums 2 Record in general journal form payment of the estimated premium on January 15, 2019 3. On January 4, 2020, an audit of the firm\'s payroll records showed that t had actualily paid wages of $57,960 to its office ehployees and wages of $303,320 to its shop employees. Compute the actual premium for the year and the balance due the insuranice company or the credit due the firm 4. Prepare the general journal entry on December 31, 2019 to adjust the Workers\' Compensasion Insurance Expense account If all wages were attributable to shop emplovees what oremium estimate would have been calculated and recorded on January 15 Prev 4 of 4 Analyze: F4 O P 0

Solution

Work classification Amount of estimated wages Insurance Rates Office Work $52,000 $0.40/$100 Shop Work                                                                          296,000 $5.00/$100 1 Work classification Estimted Earnings x Insurance Rates Estimated Premiums Office Work $52,000 0.004 $              208 Shop Work                                                                          296,000 0.05 $        14,800 Total $        15,008 2 Date General Journal Debit Credit Jan 15, 2019 Prepaid workers’ compensation insurance $        15,008 Cash $        15,008 3 Work Classification Actual Earnings x Insurance Rates Acttual Premiums Office work $57,960 0.004 $        231.84 Shop work                                                                          303,320 0.05            15,166 Total $ 15,397.84 Estimated premiums paid      15,008.00 Additional premium due            389.84 4 Date General Journal Debit Credit Dec 31, 2019 Workers’ compensation insurance expense $        389.84 Workers’ compensation insurance payable $        389.84 Dec 31, 2019 Workers’ compensation insurance expense $        15,008 Prepaid workers\' compensation insurance $        15,008 Analyze The premium estimate would have been $17,400 [($52,000 + $296,000) × ($5.00/$100)]