Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees’ well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 5% of their salaries. Assume that no employee’s cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below. Wages and salaries $2,300,000 Employee contribution to voluntary retirement plan 115,000 Medical insurance premiums paid by employer 46,000 Dental insurance premiums paid by employer 16,100 Life insurance premiums paid by employer 8,050 Federal and state income tax withheld 494,500 FICA tax rate 7.65% Federal and state unemployment tax rate 6.20% Required: 1., 2. & 3. Record the necessary journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Record the employee salary expense, withholdings, and salaries payable. Date General Journal Debit Credit January 24 Record the employer-provided fringe benefits. Date General Journal Debit Credit January 24 Record the employer payroll taxes. Date General Journal Debit Credit January 24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees’ well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 5% of their salaries. Assume that no employee’s cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below.

Wages and salaries	$2,300,000
Employee contribution to voluntary retirement plan	115,000
Medical insurance premiums paid by employer	46,000
Dental insurance premiums paid by employer	16,100
Life insurance premiums paid by employer	8,050
Federal and state income tax withheld	494,500
FICA tax rate	7.65%
Federal and state unemployment tax rate	6.20%

Required:

1., 2. & 3. Record the necessary journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Record the employee salary expense, withholdings, and salaries payable.

Date	General Journal	Debit	Credit
January 24

Record the employer-provided fringe benefits.

Date	General Journal	Debit	Credit
January 24

Record the employer payroll taxes.

Date	General Journal	Debit	Credit
January 24

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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