Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
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Chapter 9, Problem 9.4P
Recording and Reporting Accrued Liabilities and Deferred Revenue with Discussion of Accrual versus Cash Accounting
During its first year of operations. Walnut Company completed the following two transactions. The annual accounting period ends December 31.
- a. Paid and recorded wages of $130,000 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 $4,000.
- b. Collected rent revenue on December 10 of Year 1 of $2,400 for office space that Walnut rented to another company. The rent collected was for 30 days from December 10 of Year 1 to January 10 of Year 2.
Required:
- 1. With respect to wages, provide the
adjusting entry required at the end of Year 1 and thejournal entry required on January 6 of Year 2. - 2. With respect to rent revenue, provide the journal entry for the collection of rent on December 10 and the adjusting entry required on December 31.
- 3. What is the total amount of liabilities arising from these transactions that will be reported on the balance sheet on December 31 of Year 1?
- 4. Explain why the accrual method of accounting provides more useful information to financial analysts than the cash method of accounting.
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Riverside 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 ($170,000), payroll deductions for
income tax ($17,000), payroll deductions for FICA ($18,000), payroll deductions for United Way ($3,600), employer
contributions for FICA (matching), and state and federal unemployment taxes ($2,100). Employees were paid in cash, but
these payments and the corresponding payroll deductions and employer taxes have not yet been recorded.
b. Collected rent revenue of $4,560 on December 10 for office space that Riverside rented to another business. The rent
collected was for 30 days from December 11 to January 10 and was credited in full to Deferred Revenue.
3. Show how any liabilities related to these items should be reported on the company's balance sheet at December 31.…
Current Attempt in Progress
Swifty Wholesalers Ltd. has a December 31 year end. The company incurred the following transactions related to current liabilities:
1. Swifty's cash register showed the following totals at the end of the day on March 17: pre-tax sales $55,000, GST $2,750, and
PST $3,850.
2.
3.
Swifty remitted $49,000 of sales taxes owing from March to the government on April 30.
Swifty paid its employees for the week of August 15 on August 20. The gross pay was $80,000. The company deducted $4,240
for CPP, $1,264 for El, $6,400 for pension, and $16,020 for income tax from the employees' pay.
4. Swifty recorded the employer portions of CPP and El for the week of August 15 on August 20 for $4,240 and $1,770,
respectively.
5. On September 15, all amounts owing for employee income taxes, CPP, and El pertaining to the payroll transactions above
were paid.
6.
On December 31, Swifty's legal counsel believes that the company will have to pay damages of $62,000 next year to a local…
PART 1
Lakeview Company completed the following two transactions. The annual accounting period ends December 31.
On December 31, calculated the payroll, which indicates gross earnings for wages ($72,000), payroll deductions for income tax ($7,200), payroll deductions for FICA ($5,400), payroll deductions for American Cancer Society ($2,700), employer contributions for FICA (matching), and state and federal unemployment taxes ($630). 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.
Collected rent revenue of $5,850 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. Make 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…
Chapter 9 Solutions
Financial Accounting
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5QCh. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Define deferred revenue. Why is it a liability?Ch. 9 - Prob. 9QCh. 9 - Define working capital. How is working capital...
Ch. 9 - Prob. 11QCh. 9 - When a company signs a capital lease, does it...Ch. 9 - Prob. 13QCh. 9 - Define annuity.Ch. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - What is the present value factor for an annuity of...Ch. 9 - The university golf team needs to buy a car to...Ch. 9 - Which of the following best describes accrued...Ch. 9 - Prob. 4MCQCh. 9 - A company is facing a lawsuit from a customer. It...Ch. 9 - Which of the following transactions would usually...Ch. 9 - How is working capital calculated? a. Current...Ch. 9 - Prob. 8MCQCh. 9 - SmallFish Company borrowed 100,000 at 8% interest...Ch. 9 - Prob. 10MCQCh. 9 - Prob. 9.1MECh. 9 - Computing and Interpreting Accounts Payable...Ch. 9 - Prob. 9.3MECh. 9 - Prob. 9.4MECh. 9 - Prob. 9.5MECh. 9 - Prob. 9.6MECh. 9 - Prob. 9.7MECh. 9 - Prob. 9.8MECh. 9 - Prob. 9.9MECh. 9 - Computing the Present Value of an Annuity What is...Ch. 9 - Prob. 9.11MECh. 9 - Prob. 9.12MECh. 9 - Prob. 9.1ECh. 9 - Recording Payroll Costs Paul Company completed the...Ch. 9 - Prob. 9.3ECh. 9 - Recording a Note Payable through Its Time to...Ch. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Prob. 9.8ECh. 9 - Reporting Contingent Liabilities Jones Soda is a...Ch. 9 - Prob. 9.10ECh. 9 - Prob. 9.11ECh. 9 - Prob. 9.12ECh. 9 - Computing Four Present Value Problems On January 1...Ch. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.18ECh. 9 - Prob. 9.19ECh. 9 - Prob. 9.20ECh. 9 - Prob. 9.21ECh. 9 - Prob. 9.22ECh. 9 - Prob. 9.23ECh. 9 - Prob. 9.24ECh. 9 - Recording and Reporting Current Liabilities LO9-1...Ch. 9 - Prob. 9.2PCh. 9 - Prob. 9.3PCh. 9 - Recording and Reporting Accrued Liabilities and...Ch. 9 - Prob. 9.5PCh. 9 - Prob. 9.6PCh. 9 - Prob. 9.7PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.9PCh. 9 - Prob. 9.10PCh. 9 - Prob. 9.11PCh. 9 - Prob. 9.12PCh. 9 - Prob. 9.13PCh. 9 - Prob. 9.14PCh. 9 - ALTERNATE PROBLEMS AP9-1 Recording and Reporting...Ch. 9 - Prob. 9.2APCh. 9 - Prob. 9.3APCh. 9 - Prob. 9.4APCh. 9 - Prob. 9.5APCh. 9 - Prob. 9.6APCh. 9 - Prob. 9.7APCh. 9 - Prob. 9.8APCh. 9 - Prob. 9.1CONCh. 9 - Annual Report Cases Finding Financial Information...Ch. 9 - Finding Financial Information Refer to the...Ch. 9 - Prob. 9.3CPCh. 9 - Prob. 9.4CPCh. 9 - Prob. 9.5CP
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