Sneed Co. provides various fringe benefits for its three 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 $400 per day. In addition, Sneed Co. pays $650 per month in medical insurance premiums for its employees. Sneed also contributes $400 per month into a retirement plan for the employees. The federal unemployment tax rate is .8 percent and the state unemployment tax rate is 4.0 percent on the first $7,000 of earnings per employee.
Required:
a. Prepare the monthly journal entry for the accrued fringe benefits.
b. Show the effect of the above transaction on a statements model like the one shown below.
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c. If the three employees each worked 250 days, what is Sneed Co.'s total payroll cost (salary, payroll taxes, and fringe benefits) for the year? (Assume that each employee earns $200 per day.)