Question

The journal entry to record employer payroll taxes owed affects ______.

a) liabilities only
b) assets only
c) assets and liabilities
d) liabilities and stockholders' equity

Answer 1

Liability and Stockholders’ Equity

Step-by-step explanation:

the entry increases Payroll Tax Expense and Increases liabilities.

See picture

Answer 2

a) liabilities only

Step-by-step explanation:

The journal entry to record the payroll tax expense is shown below:

Payroll tax expense A/c Dr

To Social security tax payable A/c

To Medicate tax payable A/c

To State Unemployment tax payable A/c

To Federal Unemployment tax payable A/c

(Being the payroll tax expense is recorded)

The payroll tax expense is shown on the debit side of the income statement whereas payroll tax payable is shown on the liabilities side of the balance sheet