According to a summary of the payroll of Scotland Company, $450,000 was subject to the 7.0% 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 accrued payroll taxes would include:
A) a debit to SUTA Payable of $630
B) a debit to SUTA Payable of $18,900
C) a credit to SUTA Payable of $630
D) a credit to SUTA Payable of $18,900

Question

Quizplus · Accepted Answer

The SUTA (State Unemployment Tax Act) payable is calculated as $15,000 * 4.2% = $630, which should be credited, not debited.

According to a Summary of the Payroll of Scotland Company