According to a summary of the payroll of Scotland Company, $500,000 was subject to the 6.0% social security tax and 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 salaries would include a
A) debit to Salaries Payable for $313,000
B) credit to Salaries Payable for $364,500
C) debit to Salaries Expense for $364,500
D) credit to Salaries Expense for $313,000

Question

According to a summary of the payroll of Scotland Company, $500,000 was subject to the 6.0% social security tax and 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 salaries would include a​
A) debit to Salaries Payable for $313,000
B) credit to Salaries Payable for $364,500
C) debit to Salaries Expense for $364,500
D) credit to Salaries Expense for $313,000

Quizplus · Accepted Answer

The credit to Salaries Payable is calculated by subtracting all withholdings from the total salaries. Total withholdings include social security tax ($500,000 * 6%), Medicare tax ($500,000 * 1.5%), federal income tax ($98,000), state unemployment tax ($15,000 * 4.2%), and federal unemployment tax ($15,000 * 0.8%). The remaining amount is credited to Salaries Payable.

According to a Summary of the Payroll of Scotland Company