Question

Qualpoint pays a weekly payroll of $255,000 that includes federal taxes withheld of

$38,100, FICA taxes withheld of $23,670, and 401(k) withholdings of $27,000. What is the ffect of assets and liabilities from this transaction?

a. Assets decrease $255,000 and liabilities do not change.
b. Assets decrease $193,230 and liabilities increase $61,770.
c. Assets decrease $193,230 and liabilities decrease $61,770.
d. Assets decrease $166,230 and liabilities increase $88,770.

Answer 1

The effect of the payroll transaction on the company's assets and liabilities is that assets decrease by $255,000 and liabilities decrease by $193,230.

Step-by-step explanation:

The effect of the payroll transaction on the company's assets and liabilities is as follows:

Assets decrease by $255,000. This is because the company is paying out money for salaries and taxes.

Liabilities decrease by $193,230. This is because the company is reducing its obligations to employees by paying their salaries and taxes.

Therefore, the correct answer is option C: Assets decrease $193,230 and liabilities decrease $61,770.