13 value: 0.52 points PA10-3 Recording and Reporting Current Liabilities [LO 10-

Question

13 value: 0.52 points 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 ($60,000), payroll deductions for income tax ($6,000), payroll deductions for FICA ($4,500), payroll deductions for American Cancer Society ($2,250), employer contributions for FICA (matching), and state and federal unemployment taxes ($450). 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 $5,625 on December 10 for office space that Lakeview rented to another business. The rent collected was for 30 days from December 11 to January 10 and was credited in full to Unearned Rent Revenue Required 1& 2.Complete the required journal entries for the above transactions as shown below. () Prepare the entries required on December 31 to record payroll (ii) Prepare the journal entry for the collection of rent on December 10 (ii) Prepare the adjusting journal entry on December 31. (Do not round intermediate calculations. If no entry is required for a transaction/event, select No Journal Entry Required" in the first account field.)

Explanation / Answer

Answer PA 10-3. Journal Entry S. No. Date Particulars Dr. Amt. Cr. Amt. i. 31-Dec Wages Payable    60,000.00    Withheld Income Tax Payable      6,000.00     FICA Payable      4,500.00     American Cancer Society Payable      2,250.00     Cash    47,250.00 (To record the payroll expenses) 31-Dec Payroll Tax Expenses      4,950.00     FICA Payable      4,500.00     State & Federal Unemployment Tax Payable          450.00 (To record the payroll tax expense) ii. 10-Dec Cash      5,625.00    Unearned Rent Revenue      5,625.00 (To record the rent recd in advance) iii. 31-Dec Unearned Rent Revenue      3,750.00     Rent Revenue      3,750.00 (To record the rent revenue) Rent Revenue = $5,625 X 20/30 = $3,750

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