The following information relates to Ponte Manufacturing Company$$s workers$$ compensation insurance premiums for $20$X$1.$ On January $15,20$X$1,$ the company estimated its premium for workers$$ compensation insurance for the year on the basis of that data.

Work

Classification Amount of Estimated Wages Insurance

Rates

Office work $ $63,000$ $ $0\mathrm{.}40/$$$100$

Shop work $307,000$ $ $5\mathrm{.}00/$$$100$

Required:

Compute the estimated premiums.

Record in general journal form payment of the estimated premium on January $15,20$X$1.$

On January $4,20$X$2,$ an audit of the firm$$s payroll records showed that it had actually paid wages of $$68,960$ to its office employees and wages of $$314,320$ to its shop employees. Compute the actual premium for the year and the balance due the insurance company or the credit due the firm.

Prepare the general journal entry on December $31,20$X$1,$ to adjust the Workers$$ Compensation Insurance Expense account.

Analyze:

If all wages were attributable to shop employees, what premium estimate would have been calculated and recorded on January $15,20$X$1?$