As of December 31, Marr, Inc., has accrued benefits to its employees for medical insurance (in the amount of $12,000) and a contribution to a retirement program (at 10% of the employees' $200,000 gross salary). Prepare the December 31 entry for Marr by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

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Business

Elsie Foster

26 November, 03:12

As of December 31, Marr, Inc., has accrued benefits to its employees for medical insurance (in the amount of $12,000) and a contribution to a retirement program (at 10% of the employees' $200,000 gross salary). Prepare the December 31 entry for Marr by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

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Carley Cantu · Answer 1

Dr employees benefits expense $32,000

Cr medical insurance payable $12,000

Cr retirement benefit payable $20,000

Explanation:

The company is yet to remit the funds on behalf of its employees, however the benefits relating to the cost in terms of employees' services to the company have been received, hence the costs even not yet paid should be recognized in the books in accordance with accrual concept (costs should be recognized when incurred not when paid for).

Total accrued benefits=$12,000 + ($200,000*10%) = $32000

The total accrued benefits should be debited to employees benefits expense account while the medical insurance payable and retirement benefit payable are to be credited with $12,000 and $20,000 respectively.