During 2015, Walnut Company completed the following two transactions. The annual accounting period ends December 31.
a) Paid and recorded wages of $130,000 during 2015; however, at the end of December 2015, three days’ wages are unpaid and unrecorded because the weekly payroll will not be paid until January 6, 2016. Wages for the three days are $4,000.
b) Collected rent revenue on December 10, 2015, of $2,400 for office space that Walnut rented to another party. The rent collected was for 30 days from December 10, 2015, to January 10, 2016, and was credited in full to Rent Revenue.
Q1. Create a Journal entry for the above transaction
Q2. Determine the financial statement effects for each of the following: (a) the adjusting entry for accrued wages required on December 31, 2015, (b) the January 6, 2016, journal entry for payment of any unpaid wages from December 2015, (c) the journal entry for the collection of rent on December 10, 2015, and (d) the adjusting entry for rent on December 31, 2015. Indicate the effects using the following schedule, and explain each entry:
| Date | Assets | Liabilities | Stockholders Equity |
| Date | Particular | Debit | Credit |
| December 31, 2015 | Wages | 40000 | |
| To unpaid wages
(being the wages amount of 4000 not paid in 2015 but actually expenses of 2015 so we have to pass the entry for accrual expenses) |
4000 | ||
| December 31, 2015 | Rent Revenue | 2400 | |
| To Unearned Revenue
( Being the entry for the unearned revenue for the year 2015 and actually it is pre recived but actually it foll in the year 2016 so we have to pass the adjustment entry in the year 2015) |
2400 | ||
| January -6-2016 | unpaid wages | 4000 | |
| To Cash
( being the wages paid on 6th january but actually amount for 2015 so we pass the entry as unpaid wages) |
4000 | ||
| December-10 | Cash | 130,000 | |
| Rent revnue
(being the entrye rent receive on december 2015) |
130,000 |
using the following schedule, and explain each entry:
| Date | Assets | Liabilities | Stockholders Equity |
| December 31, 2015
the adjusting entry for accrued wages |
Increses
(Unpaid wages increses the liabelity to pay the wages ) |
||
| adjusting entry for rent on December 31, 2015 | Increase
By crediting Unearned Income, we are recording a liability for $24,000. |
