Question

On July 1, 2004, Gee, Inc. leased a delivery truck from Marr Corp. under a 3-year operating lease. Total rent for the term of the lease was $36,000, payable as follows: 12 months at $500 = $6,00012 months at $750 = 9,00012 months at $1,750 = 21,000All payments were made when due. In Marr's June 30, 2006 balance sheet, the accrued rent receivable should be reported as

Answer 1

Answer:

$9,000

Explanation:

Given:

Date on which the delivery truck has been leased = July 1, 2004

Total rent  for the lease = $36,000

Total operating lease time = 3 years

Thus,

Per year lease amount to be paid = $36,000 / 3 = $12,000

Payable amount as:

12 months at $500 = $6,000

12 months at $750 = $9,000

12 months at $1,750 = $21,000

Now,

on June 30, 2006  year of lease has been completed

therefore, the total revenue to be received by the Marr corp. on June 30, 2006 will be:

$12,000 × 2 = $24,000 should be received by the June 30, 2006

but,

The actual amount received during 2 years duration

=   12 months at $500 + 12 months at $750

= $6,000 + $9,000

= $15,000

Therefore,

The amount to be reported in the rent receivable on June 30, 2006

= total revenue to be received -  actual amount received

= $24,000 - $15,000

= $9,000