Art Parrish is the sole employee of Parrish Sales.His company pays a portion of his health insurance premium,and also contributes to a retirement plan in his name.The company share of the health insurance premium is $400,and the company contribution to the retirement plan is $550.The third journal entry in the payroll cycle to record the employee benefits to be paid by the company should include a credit to Cash for $950.

Question

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The third journal entry in the payroll cycle should include a debit to Employee Benefits Expense for $950, not a credit to Cash. This entry records the company's cost of providing benefits to the employee.

Art Parrish Is the Sole Employee of Parrish Sales