Question

Knowledge Check 01 As of December 31, Marr, Inc., has accrued benefits to its employees for medical insurance (in the amount of $12,000) and a contribution to a retirement program (at 10% of the employees' $200,000 gross salary). Prepare the December 31 entry for Marr by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer:

Journal Entry to record the employee benefit expense

Dr. Employee Benefits Expense                   $32,000

Cr. Employee Medical Insurance Payable   $12,000

Cr. Employee retirement program payable $20,000

Explanation:

Employee benefits expense is the sum of medical insurance and retirement program expenses. As these payments are accrued and not yet been paid, so these will be classified as liabilities.

Employee Medical Insurance expense = $12,000

Employee retirement expense = $200,000 x 10% = $20,000

Employee benefits expense = Employee Medical Insurance + Employee retirement program

Employee benefits expense = $20,000 + $12,000

Employee benefits expense = $32,000