During its first year of operations, Chestnut Company completed the following two transactions. The annual accounting period ends December 31.
a. Paid and recorded wages of $89,000 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 9 of Year 2. Wages for the three days are $7,000.
b. Collected rent revenue of $7,900 on December 14 of Year 1 for office space that Chestnut rented to another company. The rent collected was for 30 days from December 14 of Year 1 to January 12 of Year 2.

Required:
1. With respect to wages, provide the adjusting entry required at the end of Year 1 and the journal entry required on January 9 of Year 2.
2. With respect to rent revenue, provide the journal entry for the collection of rent on December 14 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 decision makers than the cash method of accounting.