Art Parrish, the Sole Employee of Parrish Sales, Has Gross

question 40

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 $110,100, 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. Which of the following is included in the entry in the payroll cycle to record the liability of payroll withholding deductions?

• A)debit to Salary Payable
• B)credit to United Way Payable
• C)debit to FICA Tax Payable
• D)debit Cash

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Definitions:

Semiannual

Occurring twice a year; every six months.

Financial Leases

A type of lease where the lessee has use of the asset for a significant portion of its useful life, and the lease terms closely resemble the conditions of outright ownership.

Capitalized

To be capitalized means to record an expense as an asset on the balance sheet rather than an immediate expenditure, spreading its impact over its useful life.

Lease Obligations

Financial commitments arising from lease agreements, which may include future lease payments for rented equipment or property.