Question

During its first year of operations, Walnut Company completed the following two transactions. The annual accounting period ends December 31.

1. Paid and recorded wages of $140,000 during Year 1; however, at the end of Year 1, three days' wages are unpaid and have not yet been recorded because the weekly payroll will not be paid to employees until January 6 of Year 2. Wages for the three days are $5,700.
2. Collected rent revenue of $3,000 on December 12 of Year 1 for office space that Walnut rented to another company. The rent collected was for 30 days from December 12 of Year 1 to January 10 of Year 2.

With respect to wages, provide the adjusting entry required at the end of Year 1 and the journal entry required on January 6 of Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. With respect to rent revenue, provide the journal entry for the collection of rent on December 12 and the adjusting entry required on December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• 1

  Record the collection of rent on December 12.

• 2

  Record the adjusting entry related to rent revenue.

	WALNUT COMPANY Balance Sheet (Partial) As of December 31 Current liabilities: Total

• 1

  Record the adjusting entry related to wages.

• 2

  Record the payment of any unpaid wages from

Answer 1

1.)	Date	Account Titles	Debit $	Credit $
	December 31, year 1	Wages Expense	5,700
		Wages Payable		5,700
	January 6, Year 2	Wages Payable	5,700
		Cash		5,700
2.)	Date	Account Titles	Debit $	Credit $
	December 12, Year 1	Cash	3,000
		Unearned Rent Revenue		3,000
	December 31, year 1	Unearned Rent Revenue	2,000
		Rent Revenue		2,000
		(3,000 x 20/ 30 )
	WALNUT COMPANY
	Balance Sheet (Partial)
	As of December 31
	Current liabilities:	Amount $
	Unearned Rent Revenue	1,000	=3000-2000
	Wages Payable	5,700
	Total	6,700