Ramon Gonzalez's gross pay for the week was $700. He had deductions of $85 for federal income tax, $43.40 for social security tax, $10.15 for Medicare tax as well as $5 for union dues. The journal entry to record his federal income tax withheld would include:
A)a debit to Salaries Expense for $556.45
B)a debit to Salaries Payable for $700
C)a credit to Employee Income Tax Payable for $85
D)a debit to Employee Income Tax Payable for $85

Question

Quizplus · Accepted Answer

A credit to Employee Income Tax Payable for $85 is correct because it reflects the amount withheld from Ramon Gonzalez's pay for federal income tax, which is a liability the company owes to the tax authorities on behalf of the employee.

Ramon Gonzalez's Gross Pay for the Week Was $700