Question

Athena Company provides employee health insurance that costs $15,500 per month. In addition, the company contributes an amount equal to 3% of the employees' $155,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:_________.
Debit to Payroll Taxes Expense $20,150.
Debit to Employee Retirement Program Payable $4650.
Credit to Employee Benefits Expense $15,500.
Debit to Medical Insurance Payable $15,500.
Debit to Employee Benefits Expense $20,150.

Answer 1

Answer: Debit to Employee Benefits Expense $20,150

Explanation:

Amount that company gives to employees as benefits;

= Health insurance + Retirement contribution

= 15,500 + ( 3% * 155,000)

= 15,500 + 4,650

= $20,150

As this is an expense, it will be debited to the relevant expense account being the Employee Benefits expense account.