The following totals for the month of April were taken from the payroll register of Magnum Company: $\begin{array}{ll}
\text { Salaries } & \$ 10,000 \
\text { FICA taxes withheld } & 750 \
\text { Income taxes withheld } & 2,000 \
\text { Medical insurance deductions } & 450 \
\text { Unemployment taxes } & 420
\end{array}$ The entry to record accrual of employer's payroll taxes would include a
A) debit to Payroll Tax Expense for $1,170
B) debit to FICA Taxes Payable for $1,500
C) credit to Payroll Tax Expense for $420
D) debit to Payroll Tax Expense for $1,620

Question

Quizplus · Accepted Answer

The entry to record accrual of employer's payroll taxes would include a debit to Payroll Tax Expense for $1,170. This is because the employer is responsible for paying both the employee's and the employer's share of FICA taxes. The employer's share of FICA taxes is 7.65%, which is equal to $750 x 7.65% = $57.38. The employer is also responsible for paying unemployment taxes, which are 6.2%, which is equal to $750 x 6.2% = $46.50. Therefore, the total amount of employer's payroll taxes that need to be accrued is $57.38 + $46.50 = $1,170.

The Following Totals for the Month of April Were Taken