If workers compensation insurance if figured as a percentage of payroll (0.2% or .002 as a decimal) for the year and payroll is expected to be $185,000 for the year, and the original journal entry for 1 Jan was already entered. However, at the end of the year, payroll was actually given at $197,500. Give the needed adjustment for 31 December with this new information on account.

Debit Workers Compensation insurance payable $395, Credit accounts payable $395

Debit Workers Compensation Expense $395, Credit accounts payable $395

Debit Workers Compensation Expense $25, Credit accounts payable $25

Debit Workers Compensation Expense $25, Credit cash $25

No adjusting entry is needed, just put an explanation to make up the difference in the general journal