Rambling Company has an employee whose total salary for the month of January totaled $20,000.The federal income tax rate for this employee is 15%,the FICA Social Security tax is 6.2%,and the FICA Medicare tax is 1.45%.How would the company accrue the January salaries expense and withholding of January taxes for this employee?
A)Debit Salaries Expense for $20,000,credit FICA-Social Security Taxes Payable for $1,240,credit FICA-Medicare Taxes Payable for $290,credit Employee Federal Income Taxes Payable for $3,000,and credit Salaries Payable for $15,470.
B)Debit Salaries Expense for $20,000,credit FICA-Social Security Taxes Payable for $1,240,credit FICA-Medicare Taxes Payable for $290,credit Employee Federal Income Taxes Payable for $3,000,and credit Cash for $15,470.
C)Debit Salaries Expense for $20,000 and credit Salaries Payable for $20,000.
D)Debit Salaries Expense for $15,470 and credit Salaries Payable for $15,470.
E)Debit Salaries Expense for $20,000,credit FICA-Social Security Taxes Expense for $1,240,credit FICA-Medicare Taxes Expense for $290,credit Employee Federal Income Taxes Expense for $3,000,and credit Cash for $15,470.

Question

Quizplus · Accepted Answer

The company should debit Salaries Expense for the total amount of the employee's salary, which is $20,000. Then, the company should credit FICA-Social Security Taxes Payable for 6.2% of the employee's salary, which is $1,240. The company should also credit FICA-Medicare Taxes Payable for 1.45% of the employee's salary, which is $290. The company should credit Employee Federal Income Taxes Payable for the federal income tax rate of 15% on the employee's salary, which is $3,000. Finally, the company should credit Salaries Payable for the remaining amount of the employee's salary after taxes have been withheld, which is $15,470.

Rambling Company Has an Employee Whose Total Salary for the Month