The Correct Journal Entry to Record the Payment of FUTA

question 12

Multiple Choice

The correct journal entry to record the payment of FUTA is to:

• A) debit Cash; credit FUTA Payable.
• B) debit FUTA Expense; credit Cash.
• C) debit FUTA Payable; credit Cash.
• D) debit Cash; credit FUTA Expense.

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Definitions:

Discount Bonds

Bonds that are sold for less than their face value, typically reflecting that the market interest rates are higher than the bond's coupon rate.

Bond Price

The amount of money for which a bond is bought or sold in the market, influenced by interest rates, credit quality, and maturity period.

YTM

Yield to Maturity (YTM) is the total return anticipated on a bond if the bond is held until its maturity date, accounting for its current market price, interest payments, and time value.

AAA Credit Rating

The highest credit rating assigned to a borrower's debt instruments by credit rating agencies, indicating an extremely low risk of default.