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

question 121

Multiple Choice

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%.The second entry in the payroll cycle to record the disbursement of his net pay should include which of the following?

• A) Credit to Salary payable for $4,000
• B) Debit to Cash for $2,974
• C) Debit to Employee income tax payable of $720
• D) Credit to FICA tax payable of $306

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