Dan Jones and Pat Smith are the only two employees of Lone Star Company. In January, 2012, Dan's gross pay was $5,500 and Pat's gross pay was $5,900. All earnings are subject to FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. Which of the following would be included in the entry to record the payroll tax expense to be paid out by Lone Star Company for January?
A)a debit to Salary payable to employees for $165.30
B)a debit to FICA-OASDI for $165.30
C)a credit to FICA-Medicare Tax payable for $165.30
D)a credit to Salary expense for $165.30

Question

Quizplus · Accepted Answer

The FICA-Medicare Tax payable is calculated as 1.45% of the total gross pay of both employees, which is $11,400 ($5,500 + $5,900). The tax amount is $165.30, which is credited to the FICA-Medicare Tax payable account.

Dan Jones and Pat Smith Are the Only Two Employees