Richard and Linda are the only two employces of Carolina Company. In January, 2013, Richard's gross pay was $5,500 and Linda's gross pay was $5,200. Each employee pays federal income tax equal to 25% of gross pay. In addition, Linda pays $200 for insurance premiums and Richard pays $225. Each has $25 withheld for life insurance premiums. Assume a FICA tax rate of 8% on all earnings, a federal unemployment tax rate of 0.8%, and a state nemployment tax rate of 5.4%. The unemployment taxes are based on the first $7,000 of employee annual earnings
The entry to record the payroll 'r Janary would include a
A. debt to salary payable to employees for $6,694.
B. credit to federal unemployment tax payable for $86.
C. credit to FICA tax payable for $856.
D. credit to state unemployment tax payable for $578.