Year-End Analysis of Accounts
An analysis of cash records and account balances of Bennett, Inc., for
2006 is as follows:
Account Account Cash
Balances Balances Received or
Jan. 1, 2006 Dec. 31, 2006 Paid in 2006
Wages Payable . . . . . . . . . . . . . . . . . $2,600 $3,000
Unearned Rent . . . . . . . . . . . . . . . . . 4,500 5,000
Prepaid Insurance . . . . . . . . . . . . . . . 100 120
Paid for wages . . . . . . . . . . . . . . . . . $29,600
Received for rent . . . . . . . . . . . . . . . 12,000
Paid for insurance . . . . . . . . . . . . . . 720
Required:
Determine the amounts that should be included on the 2006 income
statement for (1) wages
expense, (2) rent revenue, and (3) insurance expense.

Hi there,

The key to this problem is what is called the Matching Princple. 
Matching Principle states two things:
1. Revenues are recorded when earned. 
2. Expenses are recorded when incurred. 

Having said that, let's get into the question.

(1) Wages.
The wages payable increased from $2,600 to $3,000.
Thus, aside from what Bennett paid that year, they incurred $400 more
in wage expense during 2006.  Therefore, the amount that should be
included in the income statement is:
$29,600 + $400 = $30,000

(2) Rent revenue
Bennett received $12,000 for rent but their unearned rent account
increased by $500.  So, the actual rent revenue -earned- during 2006
is 500 less than what they were paid for.  Thus, the amount that
should be included in the income statement is: $11,500.

(3) Insurance expense
Bennett paid $720 for insurance but the prepaid insurance account
increased by $20 so they paid $20 more than the amount of expense that
they incurred.  Thus, the amount that should be included in the income
statement is $720 - $20 = $700.

I hope this has helped and please feel free to ask for any clarification.

Cheers,
Tox-ga

Thanks! This really helps me understand what I am trying to do!