Kevin, an employee of Sunbeam, Inc, has gross salary for May of $7,000
The entire amount is under the OASDI limit of $117,000 and thus subject to FICA. He is also subject to federal income tax at a rate of 20%. 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%.)
A) debit to Cash for $5,064.50
B) credit to Cash for $5,064.50
C) debit to Employee Income Tax Payable of $5,064.50
D) debit to FICA Tax Payable of $5,064.50
B .Gross Pay $7,000
Less: Federal Income Tax 1,400.00
Less: OASDI ($7,000 x 6.2%) 434.00
Less: Medicare ($7,000 x 1.45%) 101.50
Net Pay $5,064.50
Credit to Cash $5,064.50
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