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 $110,100, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Art has a deduction of $320 for health insurance and $80 for United Way. Which of the following is included in the entry in the payroll cycle to record the disbursement of his net pay?
A)credit to Salaries and Wages Payable
B)debit to United Way Payable
C)debit FICA Tax Payable
D)credit Cash

Question

Quizplus · Accepted Answer

The disbursement of Art's net pay will result in a credit to Salaries and Wages Expense, a debit to FICA Tax Payable (to record the employer's portion of FICA taxes), a debit to Federal Income Tax Payable, a debit to Health Insurance Payable, and a debit to United Way Payable. The final entry will be a credit to Cash, as this is the amount that is actually paid out to Art. Therefore, the correct choice is D, credit Cash.

Art Parrish, the Sole Employee of Parrish Sales, Has Gross