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Recording and Reporting Accrued Liabilities and Deferred Revenue with Discussion of Accrual versus Cash Accounting LO9-1

[The following information applies to the questions displayed below.] During its first year of operations, Walnut Company completed the following two transactions. The annual accounting period ends December 31.

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 $4,500.

Collected rent revenue on December 10 of Year 1 of $1,200 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.

1. 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.)

-Record the adjusting entry related to wages.

-Record the payment of any unpaid wages from December, Year 1.

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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

-Record the collection of rent on December 10.

-Record the adjusting entry related to rent revenue.

3. Show how any liabilities related to these transactions should be reported on the companys balance sheet at December 31, Year 1.

	WALNUT COMPANY Balance Sheet (Partial) As of December 31 Current liabilities: Total $0

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