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)