Angie Pereira and Ferro Schwartz are employees of Free Star, Inc. In February 2019, Angie's gross pay was $6000, and Ferro's gross pay was $7400. 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 salaries expense for February?

Question

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Explanation: The FICA-OASDI Taxes Payable is calculated based on the gross pay of both employees and the OASDI tax rate of 6.2%. The combined gross pay is $6000 + $7400 = $13400. The OASDI tax on this amount is $13400 * 6.2% = $830.80. This amount is a liability for the employer to remit to the government, hence it is credited to FICA-OASDI Taxes Payable. Choices A, B, and D involve incorrect interpretations of how payroll taxes and expenses are recorded.

Angie Pereira and Ferro Schwartz Are Employees of Free Star