Laurin
Corporation offers parental benefits to its staff as a top-up on employment
insurance so that employees end up receiving 100% of their salary for 12 months
of parental leave. Ruzbeh Awad, who earns $74,000 per year, announced that he
will be taking parental leave for a period of four months starting on December
1, 2011. Assume that the Employment Insurance program pays him a maximum of
$720 per week for the four months. Prepare all entries that Laurin Corporation
must make during its 2011 fiscal year related to the parental benefits plan as
it applies to Ruzbeh Awad.
December 1, 2011:
|
Employee Benefit Expense*...............
|
12,427
|
|
|
Parental
Leave Benefits Payable.... EI Premiums Payable (920 X 1.4)....
|
|
12,427
|
|
* Salary for 4 months ($74,000 X 4/12)
|
$24,667
|
|
Less: employment insurance
|
|
|
payments ($720/week X 17
weeks)
|
(12,240)
|
|
Employee Benefit Expense
|
$12,427
|
For each of the 4 weeks in
December, 2011, Laurin Corporation will pay Ruzbeh Awad a top up amount and
record the payments as follows:
|
Parental Leave Benefits Payable.........
|
703.08
|
|
|
Cash............................... EI Premiums Payable (920 X 1.4)....
|
|
703.08
|
|
($74,000 ÷ 52 weeks) = $1,423.08 – $720.00
= $703.08
|
|
|
