Assuming a Medicare tax rate of 1.45% and monthly gross wages of $5,000, the amount recorded in Medicare Tax Payable for one quarter for the employee's payroll deduction is
A)a debit for $217.50.
B)a debit for $72.50.
C)a credit for $217.50.
D)a credit for $72.50.

Question

Quizplus · Accepted Answer

The Medicare tax is calculated as 1.45% of the monthly gross wages. For $5,000, the monthly Medicare tax is $72.50 ($5,000 * 1.45%). For one quarter (three months), this amounts to $217.50 ($72.50 * 3). Since this is an amount that the employer owes to the government, it is recorded as a credit in the Medicare Tax Payable account.

Assuming a Medicare Tax Rate of 1