Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The fourth journal entry in the payroll cycle to record the employer's payroll taxes should include which of the following?
A) Debit to Payroll tax expense
B) Debit to FICA tax payable
C) Credit to Payroll tax expense
D) Credit to Cash

Question

Quizplus · Accepted Answer

DThe correct entries to record the employer's payroll taxes would include a debit to Payroll Tax Expense (A) for the amount of the employer's share of FICA taxes, and a credit to Cash (D) for the payment of those taxes. The employer's payroll taxes are an expense to the employer and are paid out in cash, hence the debit to an expense account and the credit to Cash.

Art Parrish,the Sole Employee of Parrish Sales,has Gross Salary for March