Rambling Company Has One Employee Whose Total Salary for the Month

question 93

Multiple Choice

Rambling Company has one employee whose total salary for the month of January totaled $20,000.The federal income tax rate for this employee is 15%,the FICA Social Security tax is 6.2%,and the FICA Medicare tax is 1.45%.The state unemployment tax rate is 5.4% and the federal unemployment tax rate is 0.8% of the first $7,000 paid each employee.How would the company accrue its January employer's payroll tax expense and related liabilities?

• A)Debit Salaries Expense for $20,000,credit FICA-Social Security Taxes Payable for $1,240,credit FICA-Medicare Taxes Payable for $290,credit Employee Federal Income Taxes Payable for $3,000,and credit Salaries Payable for $15,470.
• B)Debit Payroll Tax Expense for $1,964,credit FICA-Social Security Taxes Payable for $1,240,credit FICA-Medicare Taxes Payable for $290,credit State Unemployment Tax Payable for $378,credit Federal Unemployment Tax Payable for $56.
• C)Debit Payroll Tax Expense for $2,770,credit FICA-Social Security Taxes Payable for $1,240,credit FICA-Medicare Taxes Payable for $290,credit State Unemployment Tax Payable for $1,080,credit Federal Unemployment Tax Payable for $160.
• D)Debit Payroll Tax Expense for $434,credit State Unemployment Tax Payable for $378,and credit Federal Unemployment Tax Payable for $56.
• E)Debit Payroll Tax Expense for $1,240,credit State Unemployment Tax Payable for $1,080,credit Federal Unemployment Tax Payable for $160.

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Definitions:

Management

The process of dealing with or controlling things or people, often within an organizational context.

Leadership

The act of guiding or influencing a group towards achieving its goals.

Honesty

The quality of being truthful, trustworthy, and sincere in actions and words.

Rulers

Instruments used for measuring distances or drawing straight lines, or metaphorically, individuals or regulations that govern or dictate actions.