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

question 5

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

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Definitions:

Appraised Fair Value

Appraised fair value is the estimation of an asset's worth at a particular time, based on expert analysis and market conditions.

Cost

The amount of money or resources expended to acquire an asset or to produce a product or service.

Depreciated

Depreciation refers to the reduction in the value of an asset over time due to wear and tear or obsolescence.