A company has 24 employees who are paid on a monthly basis. For the most recent month, gross earnings were $78,000, of which $27,000 is subject to employment taxes. The federal unemployment tax rate is .8% and the state unemployment rate is 5.4%. Federal income taxes are withheld at the rate of 20% of total earnings. All earnings are subject to FICA taxes of 8%.
Which of the following is included in the entry to record salary expense?
A) A debit to Employee income tax payable for $15,600
B) A debit to Salary expense for $85,914
C) A credit to Salary payable for $56,160
D) A debit to FICA tax payable for $6,240

Question

Quizplus · Accepted Answer

The salary payable is calculated as gross earnings minus federal income tax, FICA tax, and unemployment taxes. The calculation is $78,000 - ($78,000 * 20%) - ($78,000 * 8%) = $56,160.

A Company Has 24 Employees Who Are Paid on a Monthly