Question

Sandler Company completed the following two transactions. The annual accounting period ends December 31.

a.

On December 31, calculated the payroll, which indicates gross earnings for wages ($390,000), payroll deductions for income tax ($41,000), payroll deductions for FICA ($33,000), payroll deductions for United Way ($5,300), employer contributions for FICA (matching) and state and federal unemployment taxes ($3,300). Employees were paid in cash, but payments for the corresponding payroll deductions have not been made and employer taxes have not yet been recorded.

b.

Collected rent revenue of $1,890 on December 10 for office space that Sandler rented to another business. The rent collected was for 30 days from December 11 to January 10 and was credited in full to Unearned Revenue.

Required:

1. & 2.

Complete the required journal entries for the above transactions as shown below:
(i) Prepare the entries required on December 31 to record payroll.
(ii) Prepare the journal entry for the collection of rent on December 10.
(iii) Prepare the adjusting journal entry on December 31.
(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Show how any liabilities related to these items should be reported on the company’s balance sheet at December 31. (Do not round intermediate calculations.)

Answer 1

No.	Date	Account Titles	Debit	Credit
(i)	Dec 31	Salaries and wages expense	$390,000
		Withheld income taxes payable		$41,000
		Charitable contributions payable		$5,300
		FICA payable		$33,000
		Cash		$310,700
		Payroll tax expense	$36,300
		FICA payable		$33,000
		State and federal unemployment taxes payable		$3,300
(ii)	Dec 10	Cash	$1,890
		Unearned rent revenue		$1,890
(iii)	Dec 31	Unearned rent revenue ($1,890/30x20)	$1,260
		Rent Revenue		$1,260

Liabilities at December 31
Unearned Revenue (1890-1260)		$630
Taxes payble:
Income tax Withheld/Payable	$41,000
Federal Withholding Taxes payable	$33,000
Contribution to United way	$5,300
State & Employement employment Taxes Payable	$3,300	$82,600