Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company.
The entry to record accrual of employer's payroll taxes would include a
A) debit to Payroll Tax Expense for $248
B) debit to FICA Taxes Payable for $1,800
C) credit to Payroll Tax Expense for $248
D) debit to Payroll Tax Expense for $1,148

Question

Use the following information to answer the following questions. The following totals for the month of April were taken from the payroll register of Magnum Company.
 The entry to record accrual of employer's payroll taxes would include a
A) debit to Payroll Tax Expense for $248 
B) debit to FICA Taxes Payable for $1,800 
C) credit to Payroll Tax Expense for $248 
D) debit to Payroll Tax Expense for $1,148

Quizplus · Accepted Answer

The accrual of employer's payroll taxes includes both FICA and federal unemployment taxes. The total amount of FICA taxes for April is $1,800 (employer and employee portion) and the total amount of federal unemployment tax is $248. Therefore, the entry to record the accrual of employer's payroll taxes would be a debit to Payroll Tax Expense for $1,148 ($1,800 + $248 = $2,048, but the entry only records the employer portion which is $2,048 - $900 employee portion = $1,148). Choice A is incorrect because it only includes one type of tax (FICA) and the entry is for the accrual of both FICA and federal unemployment taxes. Choice B is incorrect because it only includes FICA taxes and does not include federal unemployment taxes. Choice C is incorrect because it is a credit entry for an accrual, which is not correct accounting practice.

Use the Following Information to Answer the Following Questions