How to fill a new list while iterating over another list?

This should fix it - move the print statement out of the loop, and make a a string rather than a list.

#Variables
var1 = ['Warehouse Pencil 1.docx', 'Production Pen 20.docx']

list1 = []
for x in var1:
    splitted = x.split()
    a = splitted[0] + ' ' + splitted[1]
    list1.append(a)
print(list1)

Output:

['Warehouse Pencil', 'Production Pen']

You could also use a list comprehension:

>>> [' '.join(x.split()[:2]) for x in var1]
['Warehouse Pencil', 'Production Pen']