Dan jones and pat smith are two employees of lone star, inc. in january 2017, dan's gross pay was $11,500, and pat's gross pay was $15,400. all earnings are subject to fica-oasdi tax of 6.2% and fica-medicare tax of 1.45%. which of the following would be included in the entry to record the payroll tax expense to be paid out by lone star, inc. for january?
a) a debit to fica-oasdi taxes payable for $390.05
b) a debit to salaries payable to employees for $390.05
c) a credit to fica-medicare taxes payable for $390.05
d) a credit to salaries expense for $390.05

C) a credit to FICA-Medicare Taxes Payable for $390.05

Explanation:

Before passing the journal entry, first we have to do the calculations which are shown below:

The Total salary would be

= Dan's gross pay + Pat's gross pay

= $11,500 + $15,400

= $26,900

Now the  FICA-OASDI Tax would be

= Total salary × tax rate

= $26,900 × 6.2%

= $1,667.80

And, the FICA-Medicare Tax would be

= Total salary × tax rate

= $26,900 × 1.45%

= $390.05

Now the journal entry would be

Salary expense A/c Dr $26,900

        To FICA Social security payable $1,667.80

        To FICA Medicare tax payable $390.05

        To Salaries payable $24,842.15

(Being salary expense is recorded)

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