Tool began operations on January 1, 2007. Precision Tool pays workers’ compensation insurance premiums for its employees. The company’s accountant assembled the data below for Precision Tool for 2007:

Required
I. Prepare the general journal entry to record Precision Tool’s payment of its estimated 2007 workers’
compensation insurance premium on January 5, 2007.
2. For each of the two separate situations (A) and (B) prepare the general journal entry to adjust Precision Tool’s 2007 workers’ compensation insurance premium for its actual wages during 2007. Assume this entry is made on January 15, 2008.

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Classification Office workers Machine operators Warehouse workers Classification Office workers Machine operators Warehouse workers Estimated Wages $ 90,000 Rate per $100 of Wages 0.15 292,500 3.20 67,500 1.75 Actual Wages Situation A $ 86,469 281,024 64,852 Actual Wages Situation B $ 99,834 294,748 80,818