Question

Gross earnings for the pay period are $100,000. Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850. The journal entry to record wages paid includes a:________
A) $100,000 credit to Salaries and Wages Payable.
B) $6,700 debit to FICA Payable.
C) $100,000 debit to Salaries and Wages Expense.
D) $70,000 debit to Salaries and Wages Expense.

Answer 1

Answer:

Correct answer is C, $100,000 debit to salaries and wages expense

Explanation:

In order to recognize the expenses for the period, an expense account shoud be debited and a credit to cash or payables that depends if it is already paid (cash) or not (payable). Along with the recognition of the salaries expense paid by the company to their employees is the recognition of the deductions withheld by the employer that should be reported to certain agencies. These includes, Social Secucrity, Taxes and medical insurance mandated to be deducted on the employees wages. Employer will act as a withholding agent and will be obligue to remit it to the agencies within the period of time.