Any item a business owns that will provide future benefits is called owner’s equity.
Since financial information is communicated in accounting terms, accounting is said to
be the “language of business.”
Since there is no maximum earnings on the Medicare component of the Social Security
tax, the Medicare tax rate of 1.45% is applied to total earnings.
Ryan’s Sparkling Jewels estimated its payroll for the coming year to be $84,000. Its
workers’ compensation insurance premium rate of 0.6% is paid at the beginning of each
quarter.
Required:
Adjusting entries affect only the owner’s equity accounts.