Supermeg Dry Cleaners had the following payroll data for its May 14 pay date:

When the firm remits its health insurance premium for this pay date,what is the General Journal entry?
A)Debit Cash $13,618.71;Credit Health Insurance Payable $13,618.71
B)Debit Cash $27,237.42;Credit Health Insurance Payable $27,237.42
C)Debit Health Insurance Payable $13,618.71;Credit Cash $13,618.71
D)Debit Health Insurance Payable $27,237.42;Credit Cash $27,237.42

Question

Supermeg Dry Cleaners had the following payroll data for its May 14 pay date:

When the firm remits its health insurance premium for this pay date,what is the General Journal entry?
A)Debit Cash $13,618.71;Credit Health Insurance Payable $13,618.71 
B)Debit Cash $27,237.42;Credit Health Insurance Payable $27,237.42 
C)Debit Health Insurance Payable $13,618.71;Credit Cash $13,618.71 
D)Debit Health Insurance Payable $27,237.42;Credit Cash $27,237.42

Quizplus · Accepted Answer

The payroll data provided only shows the amount paid to employees for their wages and salaries, and does not include any portion for health insurance premiums. Therefore, the amount due for health insurance premiums would be payable to the insurance company separately.

Based on this, the most likely General Journal entry for remitting the health insurance premium would be to debit the Health Insurance Payable account (since it is a liability) and credit the Cash account (since the payment is being made in cash). Option C matches this entry, with a debit of $13,618.71 to Health Insurance Payable and a credit of $13,618.71 to Cash. Therefore, option C is the best choice.

Supermeg Dry Cleaners Had the Following Payroll Data for Its