ABC Co.has a gross payroll of $18,000.The FICA tax rate is 7.65% of the gross payroll, and the federal and state withholding are $1,600 and $963 respectively.On recording the payroll tax liability, net assets of the company:

Question

Quizplus · Accepted Answer

- FICA tax = 7.65% x $18,000 = $1,377
- Total taxes withheld = $1,600 + $963 + $1,377 = $3,940
- Net payroll = $18,000 - $3,940 = $14,060
- Recording payroll tax liability decreases net assets, therefore the correct answer is B: decrease by $14,060.

ABC CoHas a Gross Payroll of $18,000