Gainesville Truck CenterThis company has a weekly payroll of $10,000 for its employees who work Monday through Friday. Federal and state income taxes are withheld in the amounts of $1,700 and $400, respectively, and FICA taxes are withheld at a mandatory rate of 7.65% (6.2% for Social Security and 1.45% for Medicare). In addition, the federal and state unemployment taxes are applied at rates of 2% and 5%, respectively. The company's year-end is December 31.
Refer to Gainesville Truck Center. What is the impact on the accounting equation of the journal entry for the employer's tax expenses and related liabilities for this payroll transaction?
A. Assets and liabilities will increase.
B. Assets and stockholders' equity will increase.
C. Assets and liabilities will decrease.
D. Liabilities will increase and stockholders' equity will decrease.
Answer: D
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