The Payroll records of Oregon Mist contained the following information for the month of November:

The journal entry to record the monthly Payroll Tax Expense would include a:
A) debit to Payroll Tax Expense of $25,200.
B) credit to FICA Taxes Payable of $43,400.
C) debit to Payroll Tax Expense of $48,650.
D) debit to Payroll Tax Expense of $26,950.

Question

The Payroll records of Oregon Mist contained the following information for the month of November:

The journal entry to record the monthly Payroll Tax Expense would include a:
A) debit to Payroll Tax Expense of $25,200. 
B) credit to FICA Taxes Payable of $43,400. 
C) debit to Payroll Tax Expense of $48,650. 
D) debit to Payroll Tax Expense of $26,950.

Quizplus · Accepted Answer

The monthly Payroll Tax Expense is the total amount of all the payroll taxes owed by the employer, which in this case is the sum of FICA Taxes, Federal Unemployment Tax (FUTA), and State Unemployment Tax (SUTA).

To calculate the Payroll Tax Expense, we need to add up the amounts of FICA Taxes, FUTA, and SUTA given in the payroll records:

FICA Taxes = $43,400
FUTA = $25,200 x 0.6% = $151.20
SUTA = $25,200 x 2.7% = $680.40

Payroll Tax Expense = FICA Taxes + FUTA + SUTA = $43,400 + $151.20 + $680.40 = $44,231.60

So the journal entry to record the Payroll Tax Expense would be:

Debit Payroll Tax Expense $26,950 
Credit FICA Taxes Payable $43,400 
Credit FUTA Payable $151.20
Credit SUTA Payable $680.40

The Payroll Records of Oregon Mist Contained the Following Information