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 the accrued payroll taxes would include a
A) debit to SUTA Payable for $630
B) debit to SUTA Payable for $18,900
C) credit to SUTA Payable for $630
D) credit to SUTA Payable for $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 the accrued payroll taxes would include a​
A) debit to SUTA Payable for $630
B) debit to SUTA Payable for $18,900
C) credit to SUTA Payable for $630
D) credit to SUTA Payable for $18,900

Quizplus · Accepted Answer

State Unemployment Tax Act (SUTA) payable is calculated as $15,000 * 4.2% = $630. Since it's a liability, it should be credited.

According to a Summary of the Payroll of Scotland Company