Solution-Show the effect of the above transaction on a

Show the effect of the above transaction on a statements

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Reference no: EM13925844

Watson Co. provides various fringe benefits for its three employees. It provides vacation and personal leave at the rate of one day for each month worked. Its employees earn a combined total of approximately $500 per day. In addition, Watson Co. pays $780 per month in medical insurance premiums for its employees. Watson also contributes $400 per month into a retirement plan for the employees. Assume the Social Security tax rate is 6% of the first $110,000 of salaries and the Medicare tax rate is 1.5%. The unemployment tax rate is 5.2% on the first $7,000 of earnings per employee.

Required:

a. Prepare the monthly journal entry for the accrued fringe benefits.
b. Show the effect of the above transaction on a statements model like the one shown below:

752_264-B-A-L (2824).png

c. If the three employees each worked 280 days for the year, what is Watson Co.'s total payroll cost (salary, payroll taxes, and fringe benefits) for the year? (Assume that each employee earns $250 per day.)

Reference no: EM13925844

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Show the effect of the above transaction on a statements

Reference no: EM13925844

Reference no: EM13925844

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