Question

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

1. 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.
2. 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 12 to January 10 and was credited in full to Deferred Revenue.

Required:

1. 1. & 2. Prepare the entries required on December 31 to record payroll, the collection of rent on December 10 and adjusting journal entry on December 31.
2. 3. Show how any liabilities related to these items should be reported on the company’s balance sheet at December 31.

Answer 1

Answer:

Journal entries:
Date	Accounts title and explanantion		Debit $	Credit $
31-Dec	Salaries and wages expenses account Dr.	390,000
	Income taxx payable Account		41,000
	FICA Tax Payable Account			33,000
	United way Account		5,300
	Cash account				310,700
31-Dec	Payroll Tax expense Acount Dr.		36,300
	FICA tax payable				33,000
	Federal and State Unemployment tax payable	3,300
10-Dec	Cash account Dr.			1,890
	Unearned rent revenue Account		1,890
31-Dec	Unearned rent revenue Account Dr.	1,260
	Rent revenue Account (1890/30*20)		1,260
Balance Sheet (Partial)
Liabilities:
Income tax payable			41,000
FICA tax payable			66,000
Federal and State unemployment tax payable	3,300
Umited Way Dues		5,300
Unearned rent revenue		630
Total				116,230