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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.

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