General Manufacturing estimated that its total payroll for the coming year would be $425,000. The workers’ compensation insurance premium rate is 0.2%.

REQUIRED

1. Calculate the estimated workers’ compensation insurance premium and prepare the journal entry for the payment as of January 2, 20--.

2. Assume that General Manufacturing’s actual payroll for the year is $432,000.

Calculate the total insurance premium owed and prepare a journal entry as of December 31, 20--, to record the adjustment for the underpayment. The actual payment of the additional premium will take place in January of the next year.