Question

PA10-3 Recording and Reporting Current Liabilities (LO 10-2] Lakeview 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 ($92,000), payroll deductions for income tax ($9,200), payroll deductions for FICA ($6,900), payroll deductions for American Cancer Society ($3,450), employer contributions for FICA (matching), and state and federal unemployment taxes ($805). 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. b. Collected rent revenue of $6,225 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

lakeview Company Dr. ($) 92000 Cr. ($) Salaries and wages expense Withheld Income tax payable Withheld FICA payable American cancer society payable Cash 9200 6900 3450 72450 7705 Payroll tax expense FICA payable ( matching ) State and federal unemployment Tax payable 6900 805 99705 9200 6900 - Extra work Salaries and wages expense Withheld Income tax payable Withheld FICA payable American cancer society payable FICA payable matching ) State and federal unemployment Tax payable Cash 3450 6900 805 72450 6225 Cash Unearned Rent revenue 6225 4150 Unearned Rent revenue Rent revenue ( 6225 * 20/30 ) 4150 partial Balance sheet Current liabilities Accrued payroll Withheld Income tax payable Withheld FICA payable American cancer society payable FICA payable matching ) State and federal unemployment Tax payable 9200 6900 3450 6900 805 Unearned Rent revenue ( 6225 - 4150 ) 27255 2075 29330