Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company.
The entry to record accrual of employer's payroll taxes would include a
A) debit to Payroll Tax Expense for $248
B) debit to FICA Taxes Payable for $1,800
C) credit to Payroll Tax Expense for $248
D) debit to Payroll Tax Expense for $1,148

Question

Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company.
 The entry to record accrual of employer's payroll taxes would include a
A) debit to Payroll Tax Expense for $248 
B) debit to FICA Taxes Payable for $1,800 
C) credit to Payroll Tax Expense for $248 
D) debit to Payroll Tax Expense for $1,148

Quizplus · Accepted Answer

To accrue employer's payroll taxes, we need to debit Payroll Tax Expense account and credit the related liability account (i.e. FICA Taxes Payable). Based on the given information, the tax rate for the employer's portion of FICA is 7.65% (6.2% for social security and 1.45% for Medicare) on the first $15,000 of employee wages. Therefore, the total employer's portion of FICA taxes for the month of April would be $1,148 ($15,000 x 7.65%). Hence, the entry to record the accrual of employer's payroll taxes would be:

Payroll Tax Expense             $1,148
  FICA Taxes Payable                      $1,148

Therefore, the correct answer is D.

Use the Following Information to Answer the Following Questions