Art Panache is the sole employee of Panache Sales. His employer pays a portion of his health insurance premium, and also contributes to a retirement plan in his name. The company's share of the health insurance premium is $600, and the company's contribution to the retirement plan is $780. The journal entry in the payroll cycle to record the employee benefits to be paid by the company should include a debit to Employee Health Insurance Payable for $1,380.

Question

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The journal entry to record the employee benefits should include a credit to Health Insurance Payable for $600 and a credit to Retirement Plan Payable for $780, not a debit to Employee Health Insurance Payable. Employee Health Insurance Payable is not a valid account.

Art Panache Is the Sole Employee of Panache Sales