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?

Question

Quizplus · Accepted Answer

The fourth journal entry in the payroll cycle to record the employer's payroll taxes should include a Credit to FICA tax payable, as the gross salary for March of $4,000 is subject to FICA and has not exceeded the OASDI limit of $106,800. There is no need to debit FUTA or SUTA as their respective caps have already been exceeded. Additionally, there is no need for a credit to Payroll tax expense or credit to cash at this stage.

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