According to a summary of the payroll of Scotland Company,$450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax.Federal income tax withheld was $98,000.Also,$15,000 was subject to state (4.2%)and federal (0.8%)unemployment taxes.The journal entry to record accrued payroll taxes would include a
A) debit to SUTA Payable of $630
B) debit to SUTA Payable of $18,900
C) credit to SUTA Payable of $630
D) credit to SUTA Payable of $18,900

Question

According to a summary of the payroll of Scotland Company,$450,000 was subject to the 6.0% social security tax and $500,000 was subject to the 1.5% Medicare tax.Federal income tax withheld was $98,000.Also,$15,000 was subject to state (4.2%)and federal (0.8%)unemployment taxes.The journal entry to record accrued payroll taxes would include a ​
A) debit to SUTA Payable of $630
B) debit to SUTA Payable of $18,900
C) credit to SUTA Payable of $630
D) credit to SUTA Payable of $18,900

Quizplus · Accepted Answer

SUTA Payable is calculated based on the state unemployment tax rate of 4.2% on $15,000, which equals $630 (0.042 * $15,000). This amount is a liability for the company, so it would be credited in the journal entry.

According to a Summary of the Payroll of Scotland Company,$450,000