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Brac Construction, Ltd: Calculate the missing amounts and then determine the FICA tax withholding percentage.

Other accrued liabilities-payroll. The following summary data for the payroll period
ended on November 14, 2003, are available for Brac Construction, Ltd.:

Gross pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
FICA tax withholdings . . . . . . . . . . . . . . . . . . . . . . ?
Income tax withholdings . . . . . . . . . . . . . . . . . . . . 13,760
Medical insurance contributions . . . . . . . . . . . . . . 1,120
Union dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640
Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . 21,640
Net Pay 58,360

Required:
a. Calculate the missing amounts and then determine the FICA tax withholding
percentage.
b. Use the horizontal model (or write the journal entry) to show the effects of
the payroll accrual.

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Solution Preview

Answer-A: Calculation of missing amount FICA Tax Withholding and Gross Pay

(1) Calculation of Gross Pay: Total Deduction + Net Pay =$21,640+$58,360
So, Gross Pay = $80,000

(2) Calculation of FICA Tax Withholding:

Lets say FICA Tax Withholdings is X, Therefore,

X + Income Tax Withholding + Medical Insurance Contribution + Union Dues
= Total Deductions ...

Solution Summary

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$2.19