What is the journal entry for the first quarterly payment of workers' compensation insurance?

What is the journal entry for the first quarterly payment of workers' compensation insurance?

• A. Insurance Expense 504.00, Cash 504.00.
• B. Wages Expense 126.00, Cash 126.00.
• C. Workers' Comp Expense 126.00, Cash 126.00.
• D. Workers' Compensation Insurance Expense 126.00, Cash 126.00.

Answer: (D)

Paying the quarterly workers' compensation premium is an operating expense, not a wage or other type of cost. When you pay cash for this premium, you record a debit to the specific expense account and a credit to cash for the same amount. For the first quarterly payment of 126.00, the proper entry is to debit Workers' Compensation Insurance Expense for 126.00 and credit Cash for 126.00. This captures the cost incurred in the period and the cash outflow correctly. The other options misclassify the nature of the outlay or use an incorrect amount: recording 504.00 would reflect four quarters at once or an annual figure rather than the one-quarter payment, and using Wages Expense is not appropriate for insurance for workplace injuries. A naming convention that includes Insurance in the account title (Workers' Compensation Insurance Expense) best matches the transaction.

Paying the quarterly workers' compensation premium is an operating expense, not a wage or other type of cost. When you pay cash for this premium, you record a debit to the specific expense account and a credit to cash for the same amount. For the first quarterly payment of 126.00, the proper entry is to debit Workers' Compensation Insurance Expense for 126.00 and credit Cash for 126.00. This captures the cost incurred in the period and the cash outflow correctly. The other options misclassify the nature of the outlay or use an incorrect amount: recording 504.00 would reflect four quarters at once or an annual figure rather than the one-quarter payment, and using Wages Expense is not appropriate for insurance for workplace injuries. A naming convention that includes Insurance in the account title (Workers' Compensation Insurance Expense) best matches the transaction.