Sandler Company completed the following two transactions. The annual accounting

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 ($420,000), payroll deductions for income tax ($44,000), payroll deductions for FICA ($36,000), payroll deductions for United Way ($5,600), employer contributions for FICA (matching) and state and federal unemployment taxes ($3,600). 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 $1,980 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.

Prepare the entries required on December 31 to record payroll.

Prepare the journal entry for the collection of rent on December 10.

Prepare the adjusting journal entry on December 31.

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

Explanation / Answer

date Accounts Title Dr Cr Dec-31 Wages Expenses 420000 Income tax Withheld/Payable 44000 Federal Withholding Taxes payable 36000 Contribution to United way 5600 Wages Payable 334400 (being payroll recorded) Payroll Taxes Expenses 9200 b Contribution to United way 5600 State & Employement employment Taxes Payable 3600 (Being payroll ax expense of employer recorded) 2 Cash 1980 Dec-10 Unearned Revenue 1980 Adjusting Entries Unearned Revenue 1320 Rent Revenue (1980/30*20) 1320 (Being 20 days rent earned) (Note December has 31 days but it is assumed in the question that the rent is for 30 days from Dec 11 to jan 10. So instead of 21 days 20 days are taken Liabilities Unearned Revenue (1980-1320) 660 Wages payable 334400 Taxes payble Income tax Withheld/Payable 44000 Federal Withholding Taxes payable 36000 Contribution to United way 11200 State & Employement employment Taxes Payable 3600 94800

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