Indicate whether each of the following statements is true or false.________ a) The amount of federal tax withheld from an employee's salary depends on the employee's gross pay and the number of withholding allowances the employee claims.________ b) Withheld taxes are recorded in the payroll tax expense account.________ c) An employer will submit $8,250 in FICA taxes for an employee who earns $55,000 annually. (Assume a Social Security rate of 6 percent on the first $110,000 of income and a Medicare rate of 1.5 percent on all earnings.)________ d) A voluntary deduction, such as a charitable contribution, creates a liability when it is withheld from employee pay.________ e) If an employer records gross pay of $2,400 and withholds $700 of that amount, then the employer will recognize $1,700

Question

in salary expense.

What will be an ideal response?

Answer 1

a) T b) F c) T d) T e) F

a) This is true. Gross pay increases federal tax withheld and allowances decrease federal tax withheld. 
b) This is false. Withheld taxes are recorded in the employment taxes payable account, but are not included in payroll tax expense. 
c) This is true. The employer will submit $4,125 of employer FICA taxes and $4,125 of employee FICA taxes, for a total of $8,250. 
d) This is true. When a voluntary deduction is made, the employer has an obligation to pay that amount to the intended party, which creates a liability. 
e) This is false. Salary expense will be recorded for the full amount of gross pay.