Art Parrish,the Sole Employee of Parrish Sales,has Gross Salary for March

question 156

True/False

Art Parrish,the sole employee of Parrish Sales,has gross salary for March of $4,000.The entire amount is under the OASDI limit of $106,800,and thus subject to FICA.He is also subject to federal income tax at a rate of 18%.His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA.The fifth journal entry in the payroll cycle to record the payment by the company of the tax liability to the government includes a credit to Cash for $1,332.

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Definitions:

Carrying Amount

The net amount at which an asset or liability is reported on the balance sheet, calculated as the original cost minus any accumulated depreciation, amortization, or impairment costs.

FICA - Medicare

Part of the Federal Insurance Contributions Act taxes, specifically aimed at funding Medicare, a healthcare program for the elderly and certain disabled individuals in the United States.

Withheld

Refers to a portion of an individual's earnings or payments that is not provided to them but is instead held back, often for tax purposes.

Matched by Employer

Pertains to contributions or payments, typically toward FICA taxes or retirement funds, that an employer duplicates for an employee.