the debit amount to payroll tax expense represents:
A. the employers portion
B. the employees portion
C. Both
D. None of the above.
I choose A, but thinking D. Please Help. thanks
The employers portion of the payroll taxes
i don't have an answer
To determine whether the debit amount to payroll tax expense represents the employers' portion, the employees' portion, both, or none of the above, we need to understand how payroll taxes work and how they are recorded in accounting.
Payroll taxes are taxes levied on wages and salaries by government authorities to fund various social programs, such as Social Security, Medicare, and unemployment insurance. These taxes are typically split between the employer and the employee, with each responsible for a specific portion.
To find the answer, we need to look at the journal entry for recording payroll taxes. The typical journal entry includes debiting (increasing) the payroll tax expense account and crediting (decreasing) liability accounts such as Payroll Tax Payable or Withholding Payable.
Now let's consider the answer choices:
A. The employers' portion: If the debit amount to payroll tax expense represents only the employers' portion, it means that the credit entry would be made to a liability account that represents the employees' portion (e.g., withholding payable). This option would reflect the correct treatment of payroll taxes.
B. The employees' portion: If the debit amount represents only the employees' portion, it means that the credit entry would be made to a liability account that represents the employers' portion (e.g., employer tax payable). This option would not be accurate as it does not match the usual accounting treatment.
C. Both: If the debit represents both the employers' and employees' portions, it means that the credit entry would also include the combined amount for both portions. This option would not be in line with the usual accounting practice.
D. None of the above: This option suggests that neither the employers' nor the employees' portion is represented by the debit amount. Generally, this is not the case.
Based on this discussion, option A, i.e., the debit amount representing the employers' portion, is the most likely answer. However, to be absolutely sure, it would be ideal to refer to the specific accounting policies and practices used by your organization or consult an expert in payroll accounting.