Lawrence,an employee of Light,Inc.,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $118,500,and thus subject to FICA.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.Which of the following is a part of the journal entry to record the employer's payroll taxes?
A) debit to Payroll Tax Expense
B) debit to FICA Taxes Payable
C) credit to Payroll Tax Expense
D) debit to Cash

Question

Quizplus · Accepted Answer

The correct choice is A) debit to Payroll Tax Expense. This is because when recording the employer's portion of payroll taxes, the employer recognizes an expense for their share of FICA taxes, along with any other applicable payroll taxes. Since Lawrence's salary is subject to FICA and has exceeded the cap for FUTA and SUTA, the employer would record a debit to Payroll Tax Expense to reflect the cost of these taxes. Choices B, C, and D do not represent the employer's expense recording for payroll taxes.

Lawrence,an Employee of Light,Inc