Steve,an employee of Panache Inc.,has gross salary for March of $5,000.The entire amount is under the OASDI limit of $110,100,and thus subject to FICA.He is also subject to federal income tax at a rate of 20%.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The journal entry in the payroll cycle to record the employer's payroll tax expense includes a credit to FICA-OASDI Taxes Payable for $310.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45 %.)

Question

Quizplus · Accepted Answer

The question provides all the necessary information to calculate the FICA-OASDI tax. FICA-OASDI tax rate is 6.2% of gross pay up to $110,100, which means Steve's FICA-OASDI tax would be (6.2% * $5,000) = $310. Therefore, the credit to FICA-OASDI Taxes Payable for $310 is correct for the employer's payroll tax expense.

Steve,an Employee of Panache Inc