The entry to reverse the adjusting entry for accrued payroll taxes expense includes
A)a debit to Employee Income Tax Payable.
B)a credit to Social Security Tax Payable and a credit to Medicare Tax Payable.
C)a debit to Social Security Tax Payable and a debit to Medicare Tax Payable.
D)a debit to Payroll Taxes Expense.

Question

Quizplus · Accepted Answer

The adjusting entry for accrued payroll taxes expense would have included a debit to Payroll Taxes Expense and credits to Social Security Tax Payable and Medicare Tax Payable. To reverse this entry, we need to do the opposite, which would be a credit to Payroll Taxes Expense and debits to Social Security Tax Payable and Medicare Tax Payable. Therefore, choice C is the best answer. Option A is incorrect because we don't need to debit Employee Income Tax Payable to reverse the adjusting entry for accrued payroll taxes expense. Option B is incorrect because it suggests a credit to both Social Security Tax Payable and Medicare Tax Payable, which would increase the balance in these accounts rather than decreasing it, as required to reverse the adjusting entry. Option D is incorrect because we need to credit Payroll Taxes Expense to reverse the adjusting entry, not debit it.

The Entry to Reverse the Adjusting Entry for Accrued Payroll