Question: Oswald Co provides various fringe benefits for its two employees

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?

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  • CreatedApril 20, 2015
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