Montana company recorded the month's salary expense for employees on december 31, including $800,000 of gross pay, federal tax withholding of $192,000 and FICA tax withholding of $64,000. Clausen Company will pay employees for these wages on Jan 5 of the subsequent year. How will the necessary journal entry on December 31 affect montana company's total liability.

1. It will increase total liability by $256,000.

2. it will have no effect on liabilities.

3. it will increase total liabilities by 544,000.

4. it will increase total liabilities by $800,000.