The following information relates to Ponte Manufacturing Company's workers' compensation insurance premiums for 2019. On January 15, 2019, 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 ....................................$ 64,000 .....................$0.30/$100
Shop work .......................................308,000 .....................$6.00/$100
INSTRUCTIONS
1. Compute the estimated premiums.
2. Record in general journal form payment of the estimated premium on January 15, 2019. Use 8 as the page number.
3. On January 4, 2020, an audit of the firm's payroll records showed that it had actually paid wages of $69,960 to its office employees and wages of $315,320 to its shop employees.
Compute the actual premium for the year and the balance due the insurance company or the credit due the firm.
4. Prepare the general journal entry on December 31, 2019, to adjust the Workers' Compensation Insurance Expense account. Use 98 as the page number.
Analyze:
If all wages were attributable to shop employees, what premium estimate would have been calculated and recorded on January 15, 2019?