In a payroll journal entry, a credit to Federal Withholding Tax Payable indicates

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A credit to Federal Withholding Tax Payable indicates that federal taxes have been withheld from the employee and are a liability until paid to the governing agency. When the taxes are paid to the governing agency, the credit balance is reduced. Therefore, option A is the correct answer. Option B is incorrect because a credit balance represents a liability and not a payment. Option C is incorrect because the balance in the account is not affected by taxes that are due to be withheld in the future. Option D is incorrect because one of the options is correct.

In a Payroll Journal Entry, a Credit to Federal Withholding