Oswald Co. provides various fringe benefits for its two employees. It provides vacation and personal leave at the rate of one day for each month worked. Its employees earn a combined total of approximately $500 per day. In addition, Oswald Co. pays $780 per month in medical insurance premiums for its employees. Oswald also contributes $400 per month into a retirement plan for the employees. Assume the Social Security tax rate is 6 percent of the first $110,000 of salaries and the Medicare tax rate is 1.5 percent. The unemployment tax rate is 6.0 percent on the first $7,000 of earnings per employee.
a. Prepare the monthly journal entry for the accrued fringe benefits.
b. Show the effect of the above transaction on a statements model like the one shown below:
c. If the two employees each worked 250 days for the year, what is Oswald Co.’s total payroll cost (salary, payroll taxes, and fringe benefits) for the year?

  • CreatedApril 20, 2015
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