The following totals for the month of April were taken from the payroll register of Magnum Company:?? $$\begin{array} { l r }
\text { Salaries } & \$ 10,000 \
\text { FICA taxes withheld } & 750 \
\text { Income taxes withheld } & 2,000 \
\text { Medical insurance deductions } & 450 \
\text { Unemployment taxes } & 420
\end{array}$$ The entry to record the accrual of the 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

The following totals for the month of April were taken from the payroll register of Magnum Company:?? $$\begin{array} { l r } 
\text { Salaries } & \$ 10,000 \
\text { FICA taxes withheld } & 750 \
\text { Income taxes withheld } & 2,000 \
\text { Medical insurance deductions } & 450 \
\text { Unemployment taxes } & 420
\end{array}$$ The entry to record the accrual of the 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

Quizplus · Accepted Answer

The entry to record the accrual of the 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 * 7.65% = $57.38. The employer is also responsible for paying unemployment taxes, which are equal to 420. Therefore, the total amount of payroll taxes that the employer is responsible for is $57.38 + $420 = $1,170.

The Following Totals for the Month of April Were Taken