Question

Part 2 Online Games, Inc., reported the following information in its accounting records on December 31, 2018: Annual subscription payments received in December 2018 for 2019 services. Gross salaries earned by employees (December 26-31, 2018)...... $ 12,000 Income taxes withheld from employees (December 26-31, 2018)... 3,600 610 CPP withheld from employees (December 26-31, 2018). 170 El withheld from employees (December 26-31, 2018)........ 60 Net payment to employees (made on December 31, 2018).... 2,760 The 2019 subscription payments will be earned equally during each month of 2019. The employees were paid $2,760 on December 31, 2018, but the withholdings have not yet been remitted nor have the employer CPP and El contributions. Requirements: Describe how the 2019 subscription payments should be reported in the balance sheet and income statement on (a) December 31, 2018, and (b) January 31, 2019. 2. Prepare the general journal entries for (a) the receipt of annual subscription payments in December 2018, and (b) any required adjustments for the subscription payments on January 31, 2019. Calculate the total payroll costs to be expensed on the income statement relating to the period from December 26-31, 2018. Prepare the general journal entries on December 31, 2018, to adjust for payroll costs relating to December 26-31, 2018.

just need Part 1 and 4!!!

Answer 1

Part 1

Subscription fee received in 2018 relating to 2019 should be recorded as unearned revenue.

a)

In balance sheet of 2018, it should be shown as unearned revenue and shown under other current liabilities head.

Bank 12,000

Unearned revenue 12,000

It does not have any impact on the profit and loss on 2018

b) January 31,2019

In balance sheet of 2019, $1000 (12000/12) should be debited from unearned revenue and credited to revenue

Unearned revenue   $1000

Revenue                                              $1000

In profit & loss, revenue of $1000 (12000/12) should be recognized for the month of January

Part 4)

1	Salaries expense	$        3,600
	Income tax payable		$           610
	CPP payable		$           170
	EI payable		$              60
	Bank		$        2,760
	(Salary cost accounted including statutory liabilities and paid balance)
2	CPP payable		$           170
	EI payable		$              60
	(Employer contribution of CPP and EI accounted)