Dan Jones and Pat Smith are the only two employees of Lone Star Company. In January, 2009, Dan's gross pay was $4,400 and Pat's gross pay was $5,200. All earnings are subject to FICA taxes of 8%.
Which of the following would be included in the entry to record the payroll for January?
A) A debit to Salary payable to employees for $8,832
B) A debit to FICA tax payable for $768
C) A credit to FICA tax payable for $768
D) A credit to Salary expense for $8,832

Question

Quizplus · Accepted Answer

The total gross pay for both employees is $4,400 + $5,200 = $9,600. The FICA taxes on this amount at 8% would be $9,600 * 0.08 = $768. This amount represents the liability the company owes to the government for FICA taxes, so it would be credited to FICA tax payable.

Dan Jones and Pat Smith Are the Only Two Employees