Gainesville Truck Center This Company Has a Weekly Payroll of $10,000 for Its

Gainesville Truck Center
This company has a weekly payroll of $10,000 for its employees who work Monday through Friday. Federal and state income taxes are withheld in the amounts of $1,700 and $400, respectively, and FICA taxes are withheld at a mandatory rate of 7.65% (6.2% for Social Security and 1.45% for Medicare) . In addition, the federal and state unemployment taxes are applied at rates of 2% and 5%, respectively. The company's year-end is December 31.
-Refer to Gainesville Truck Center. When the company journal entry is recorded for the payment of these wages and related liabilities, which of the following statements is true regarding the impact on the accounting equation?

A) Both assets and liabilities will decrease.
B) Assets, liabilities, and stockholders' equity will all decrease.
C) Assets and stockholders' equity will decrease, while liabilities will increase.
D) Both assets and liabilities will increase.

Correct Answer:

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