Dan Jones and Pat Smith Are the Only Two Employees

question 142

Multiple Choice

Dan Jones and Pat Smith are the only two employees of Lone Star Company.In January,2012,Dan's gross pay was $4,400 and Pat's gross pay was $5,200.All earnings are subject to FICA taxes of 7.65%. Which of the following would be included in the entry to record the salary expense for January?

• A) A debit to Salary payable to employees for $734.40
• B) A debit to FICA tax payable for $734.40
• C) A credit to FICA tax payable for $734.40
• D) A credit to Salary expense for $734.40

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Definitions:

Selling

The process of persuading someone to buy a product or service.

Administrative Expense

Costs related to the general operation of a company that are not directly tied to a specific business activity, such as salaries of executive personnel, office supplies, and utilities.

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly attributed to the product manufacturing process.

Factory Building

A type of commercial real estate designed for manufacturing processes, assembly, and storing materials and goods used and produced by industrial and manufacturing operations.