Jack, an employee of Desert Sky, Inc., has gross salary for May of . The entire amount is under the OASDI limit of $118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of %. Which of the following is a part of the journal entry for accrual of the employer payroll taxes? (Assume a FICAOASDI Tax of % and FICAMedicare Tax of %.) Jack's income to date exceeds the FUTA and SUTA tax income limits

Credit to Cash for $4,995 is correct

Explanation:

here is a complete question

has a gross salary for May of $7,000. The entire amount is under the OASDI limit of $118,500 and thus subject to FICA. He is also subject to federal income tax at a rate of 21%. Which of the following is a part of the journal entry to record the disbursement of his net pay? (Assume a FICA-OASDI Tax of 6.2 % and FICA-Medicare Tax of 1.45%. Round the final answer to the nearest dollar.) A. debit to Cash for $4,995 B. debit to FICA Tax Payable of $4,995 O C. debit to Employee Income Tax Payable of $4,995 D. credit to Cash for $4,995

The computation of the amount that becomes the part for accrual the employer payroll taxes is shown below:

Gross Pay                   $7,000  

Less: Deductions    

Federal Income tax       $1,470            ($7000 × 21%)

FICA-OASDI tax             $434              ($7000 × 6.2%)

FICA-Medicare tax         $102              ($7,000 × 1.45%)

Total Deductions          2006  

Net pay                         $4,995  

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