October 30, 2016 admin

Employee Benefits

Expenses

EMPLOYEE BENEFITS EXPENSE ACCOUNT
8040/8045/8041

ACCOUNT EXPLANATION
The cost to the dealership of employee benefit programs, such as hospitalization insurance, sickness and accident insurance, life insurance, workmen’s compensation insurance, etc.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Hospitalization premium paid by dealership CD
    Employee Benefits 8040
    Employee Benefits—Service—QL/FL/QCSC 8045
    Employee Benefits—Parts—QL/FL/QCSC 8041  
      Cash in Bank—General 1001
             
  Monthly accrual of workmen’s compensation insurance SE
    Employee Benefits 8040
    Employee Benefits—Service—QL/FL/QCSC 8045
    Employee Benefits—Parts—QL/FL/QCSC 8041  
      Accrued Insurance 2420
             
  Payment of amount (gross premiums less deposit) due to workmen’s compensation insurance company per audit (assuming earned premium exceeds accrual and deposit) CD
    Accrued Insurance 2420
    Employee Benefits 8040
    Employee Benefits—Service—QL/FL/QCSC 8045
    Employee Benefits—Parts—QL/FL/QCSC 8041  
      Cash in Bank—General 1001
      Prepaid Insurance     1510
COMMENTS
  • Costs of Workmen’s compensation insurance should be estimated, as necessary, based on pertinent factors. Monthly, a pro rata share of the estimated liability should be charged to this account and credited to Account 2420, Accrued Insurance. Differences between the accrual and the earned premium as determined by audit should be adjusted to this account.
  • Employee payroll deductions for benefit programs should be credited to Account 2120, Employee Deductions, pending their remittance.
  • Insurance premiums on officers’ life policies should be charged to Account 8600, Insurance—Officers’ Life.
  • Subsidiary records should be maintained as necessary to support preparation of income tax returns.
  • For departmentalization purposes, employee benefits for employees of operating departments should be distributed to the applicable department. Benefits for employees whose salaries are not chargeable to operating departments should be charged to Unapplied Expenses. See Departmentalization for further information.