The Following Totals for the Month of April Were Taken

question 3

Multiple Choice

The following totals for the month of April were taken from the payroll records of Metz Company. $$\begin{array} { l r } \text { Salaries } & \$ 90,000 \\\text { FlCA taxes withheld } & 6,885 \\\text { Income taxes withheld } & 19,800 \\\text { Medical insurance deductions } & 3,600 \\\text { Federal unemployment taxes } & 720 \\\text { State unemployment taxes } & 4,500\end{array}$$ The entry to record accrual of employer's payroll taxes would include a

• A)debit to Payroll Tax Expense for $12,105.
• B)credit to Payroll Tax Expense for $12,105.
• C)credit to FICA Taxes Payable for $5,220.
• D)credit to Payroll Tax Expense for $5,220.

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Definitions:

Contingently Issuable Common Stock

Shares that may be issued in the future based on the occurrence of certain events.

Diluted Earnings Per Share

A measure of a company's profit divided by the number of shares outstanding, including all possible sources of conversion.

Treasury Stock Method

A method used to compute the diluted shares outstanding by assuming all in-the-money options and warrants are exercised and the proceeds from exercise are used to buy back shares at the average market price.

Market Price

The current price at which an asset or service can be bought or sold in a open and competitive market.