Question

On December 31, calculated the payroll, which indicates gross earnings for wages ($84,000), payroll deductions for income tax ($8,400), payroll deductions for FICA ($6,300), payroll deductions for American Cancer Society ($3,150), employer contributions for FICA (matching), and state and federal unemployment taxes ($735). Employees were paid in cash, but payments for the corresponding payroll deductions have not yet been made and employer taxes have not yet been recorded.

Collected rent revenue of $6,075 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue.

Required:

1. & 2. Prepare the journal entries to record payroll on December 31, the collection of rent on December 10 and adjusting journal entry on December 31.

3. Show how any of the liabilities related to these items should be reported on the company’s balance sheet at December 31.

Answer 1

Journal entries
Date				Debit	credit
31-Dec	wages			84000
	employee tax deduction payable				8400
	FICA Deduction payable-employee contribution				6300
	american cancer society payroll deduction payable				3150
	cash				66150
31-Dec	payroll tax expenses			7035
	FICA deduction payable-employer contribution				6300
	state & federal unemployment tax payable				735
10-Dec	cash			6075
	unearned rent				6075
31-Dec	unearned rent			6075
	earned rent				6075
3) Balance sheet (Partial)
Particulars				amount
current laibilities
federal taxes payable				8400
FICA tax payable				12600
American cancer society contribution payable				3150
state & federal unemployment taxes				735
unearned rent revenue				2025
total current laibility				26910
unearned rent revenue= 6075-(6075*20/30)
unearned rent revenue = 6075-4050 = 2025