Silver 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 $420 per day. In addition, Silver Co. pays $650 per month in medical insurance premiums for its employees. Silver also contributes $400 per month into a retirement plan for the employees. The federal unemployment tax rate is .06 percent and the state unemployment tax rate is 4.0 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 horizontal statements model like the one shown below.
c. If the three employees each worked 250 days, what is Silver Co.’s total payroll cost (salary, payroll taxes, and fringe benefits) for the year? (Assume that each employee earns $315 per day.)