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TEST TH QUESTION 12 Hilinois Company has a monthly gross payroll (paid on the last day of each month) of $172,000, which is s

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Answer #1
Answer- 12
Not true Statement- (D) Illinois Company will record a total liability for FICA Tax is $13158.
Workings-
Particulars Amount
Gross Salary $ 1,72,000
Federal Income tax @25% $    43,000
State Income Tax @ 8% $    13,760
FICA Taxes @ 7.65% $    13,158
SUTA @5.4% $      9,288
FUTA @ 0.8% $      1,376
Net payroll $ 1,02,082
Explanation-
Net Payroll to be paid
=Gross Salary-Income taxes-Employees share of FICA taxes
=172000-43000-13760-13158
= $ 1,02,082
The Total liability for FICA Tax Payable is $ 26,316
Explanation-
Payroll tax payable constitutes both employer and employee tax contributions
=Total FICA taxes from both employer and employee
=13158+13158
=26316
Answer - 13
Correct option - (D) Answers B & C
Explanation-
As per US GAAP to recognise a contingent liability the obligation has to be probable and the cost should be fairly estimable.
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