Question

On January 1, 2018, Wellburn Corporation leased an asset from Tabitha Company. The asset originally cost Tabitha $450,000. The lease agreement is an operating lease that calls for four annual payments beginning on January 1, 2018, in the amount of $33,000. The other three remaining payments will be made on January 1 of each subsequent year. Which of the following journal entries should Tabitha record on January 1, 2018?Multiple Choicea. Cash 33,000 Lease receivable 33,000b Cash 33,000 Rent expense 33,000c. Cash 33,000 Deferred rent revenue 33,000d. Cash 33,000 Rent revenue 33,000

Answer 1

Answer:

Cash                                     $33,000  

     To Deferred rent revenue        $33,000  

(Being cash is recorded)

Explanation:

The Journal entry is shown below:-

January 1, 2018

Cash                                     $33,000  

     To Deferred rent revenue        $33,000  

(Being cash is recorded)

For recording the Tabitha record on January 1, 2018, we simply debited the amount of cash and credited the deferred revenue as the payment is received.