d. Revenues that have been collected Dul Corpor ation 2. As of February 28, Amer

Question

d. Revenues that have been collected Dul Corpor ation 2. As of February 28, American Greetings inte ad 7,400 full-time and 17,400 part-time employees. 4. Assun long-t Ther annu inter lowi Assume that in the last pay period of the year, the company paid $8,000,000 to employees after deducting ,000,000 for employee income taxes, $612,000 for FICA taxes, and $700,000 for other purposes. No pay- ments have been made to the government relating to these taxes. Which of the following statements is true regarding this pay period? a. FICA Taxes Payable should be $612,000. b. FICA Taxes Payable should be $1,224,000. c. Salaries and Wages Expense should be $8,000,000. d. None of the above is true. b,

Explanation / Answer

Thers is a provision in the law regarding your question which is as follows:-

As per Section 6672(a), "any person required to collect, truthfully accounted for, and pay over any tax imposed by the Internal revenue code who willfully fails to do so,

Will be liable to a penalty equal to the total amount of the tax, collected but not paid to the government."

In the given question, American Greetings corporation has not paid the FICA taxes to Government and hence their liability would be

= Tax + Penalty

= $612000+$612000

= $1224000

Hope it is clear to you why the answer is (b).

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