The following totals for the month of June were taken from the payroll register of Ford Company. $$\begin{array} { l r }
\text { Salaries and wages } & \$ 80,000 \
\text { FICA taxes withheld } & 6,132 \
\text { Income taxes withheld } & 17,600 \
\text { Medical insurance deductions } & 3,200 \
\text { Federal unemployment taxes } & 640 \
\text { State unemployment taxes } & 4,000
\end{array}$$ The entry to record the accrual of federal unemployment taxes would include a
A) credit to Federal Unemployment Taxes Payable for $640.
B) credit to Federal Unemployment Taxes Expense for $640.
C) credit to Payroll Tax Expense for $640.
D) debit to Federal Unemployment Taxes Payable for $640.

Question

The following totals for the month of June were taken from the payroll register of Ford Company. $$\begin{array} { l r } 
\text { Salaries and wages } & \$ 80,000 \
\text { FICA taxes withheld } & 6,132 \
\text { Income taxes withheld } & 17,600 \
\text { Medical insurance deductions } & 3,200 \
\text { Federal unemployment taxes } & 640 \
\text { State unemployment taxes } & 4,000
\end{array}$$ The entry to record the accrual of federal unemployment taxes would include a
A) credit to Federal Unemployment Taxes Payable for $640.
B) credit to Federal Unemployment Taxes Expense for $640.
C) credit to Payroll Tax Expense for $640.
D) debit to Federal Unemployment Taxes Payable for $640.

Quizplus · Accepted Answer

Federal unemployment taxes are a liability until they are paid, so the correct entry to record the accrual of these taxes would include a credit to Federal Unemployment Taxes Payable for $640, reflecting the increase in the company's liability.

The Following Totals for the Month of June Were Taken