On December 1, 2009, Sandler Company collected rent of $3,600 for office space r

Question

On December 1, 2009, Sandler Company collected rent of $3,600 for office space rented to another business. The rent collected was for three months from December 1, 2009, to Februrary 28, 2010. Sandler also reported the following information in its accounting records on December 31, 2009, for the December 17 to December 31 payroll.

Gross salaries earned by employess - 18,000

Federal income tax withheld from employees - 2,750

FICA taxes withheld from employees - 1,050

State unemployment taxes - 970

Federal unemployment taxes - 145

Employees were paid $14,200 on December 31, 2009, but the withholdings have not yet been remitted. No employer payroll taxes have been recorded for the period from December 17 to December 31.

Compute the total payroll costs related to the period from December 17 to December 31

Required:
1) Give the journal entry on to recors (a) the collection of rent on December 1st, 2009, and (b) the adjustment for rent on December 31st, 2009.

2) Compute the total payroll costs related to the period from December 17 to December 31, 2009.

3) Give the journal entry on December 31, 2009, to record payroll related to the period from December 17 to December 31, 2009. Separate the journal entry for the employer's payroll expenses from the entry for salaries and wages expense.

4) Show how any liabilities related to these transactions should be reported on the company's balance sheet at December 31, 2009.

Explanation / Answer

All Amounts in $ Journal Entries 1 a) Cash A/c 3600 To Rent A/c 3600 1 b) Rent A/c 2400 To Rent in Advance A/c 2400 2) Total Payroll Costs from December 17 to December 31, 2009 Gross salaries earned by employess - 18,000 Federal income tax withheld from employees - 2,750 FICA taxes withheld from employees - 1,050 State unemployment taxes - 970 Federal unemployment taxes - 145 Total Payroll Costs (Net of Taxes) = 13085 3) Journal Entry for Payroll Costs Gross Salary A/c 4915 To Federal Income Tax A/c 2750 To FICA Taxes A/c 1050 To State Unemployment Taxes A/c 970 To Federal Unemployment Taxes A/c 145 Gross Salary A/c 13085 To Salaries Payable A/c 13085 4) All the liabilities mentioned above will be shown under the heading of "Current Liabilities" This will include : Rent in Advance 2400 Federal Income Tax 2750 FICA Taxes 1050 State Unemployment Taxes 970 Federal Unemployment Taxes 145

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