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

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    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

    You will find the answer to this puzzling question inside...

    $2.19

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