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

question 99

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%.Art has a deduction of $320 for health insurance and $80 for United Way.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
• B) Debit to Payable to the United Way
• C) Debit FICA tax payable
• D) Credit Cash

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Definitions:

Backward Integration

A business strategy where a company expands its role to fulfill tasks formerly completed by businesses up the supply chain, thereby controlling production of its supplies.

Acquires Suppliers

The process by which a company takes over or purchases its suppliers to control the supply chain.

Unrelated Diversification

A corporate strategy where a company expands into areas or industries that are not related to its current business or products.

New Businesses

Enterprises that have been recently established and are in the early stages of operation.