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Mariana [72]
3 years ago
6

Assume that on November 1, 2019, a 3-month rent payment for $8,000 per month (for a total of $24,000) was made with respect to a

lease that the company entered into on that date as a tenant. The company took occupancy of the rented space immediately. The lease term will expire on January 31, 2020. The $72,000 payment was recorded as a debit to Prepaid Rent on November 1, 2019.
Required:
a) The adjusting entry on December 31, 2019, is as follows _________.
Business
1 answer:
ziro4ka [17]3 years ago
7 0

Answer:

a)

Rent Expense   Dr.$16,000

Bank                  Dr.$48,000

Prepaid Rent     Cr.$64,000

Explanation:

The company entered into lease on 1st November 2019 with rent of $8,000 per month. the company on 1st November 2019 recorded prepaid rent as follows; which is wrong

Prepaid Rent Dr. $72,000

Bank              Cr. $72,000

This is wrong entry as prepaid rent was overstated by ($72,000-$24,000 ) $48,000 and same like bank was understated by $48,000

The correct entry should have been like this as on 1st November 2019;

Prepaid Rent Dr. $24,000

Bank               Cr. $ 24,000

By 31st December 2019, two months rent have already accrued so prepaid rent should be credited by (8000*2+48,000 for additional amount recorded)

<em>So the rectifying entry is; as on 31st December 2019</em>

<em>Rent Expense   Dr.$16,000</em>

<em>Bank                  Dr.$48,000</em>

<em>Prepaid Rent     Cr.$64,000</em>

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Jasper makes a $44,000, 90-day, 9% cash loan to Clayborn Company. Jasper's entry to record the collection of the note and intere
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Jasper's entry to record the collection of the note and interest at maturity should be:

Debit     Cash Account 44,990

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The amount collected is:

Cash collected

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And

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= $44,000 * 9% * 90 / 360

= $990

Now putting the interest income value in the above equation, we have:

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Diamond Company is considering investing in new equipment that will cost $1,400,000 with a 10-year useful life. The new equipmen
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Answer:

the cash payback period is 6.09 years

Explanation:

The computation of the cash payback period is shown below:

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= 6.09

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. Net operating income $90,000.00

Add: Depreciation   $140,000.00

Net annual cash inflow   $230,000.00

Hence, the cash payback period is 6.09 years

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3 years ago
An existing electrical power line needs to have its capacity increased, and this can be done in either of two ways. The first me
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Answer:

3 years

Explanation:

<u>First method</u>

The PV of the investment can be written as:

PV1 = $15,000 + $32,500/(1+0.06)^n

<u>Second method</u>

The PV of the investment can be written as:

PV2 = $23,000 + $23,000/(1+0.06)^n

After n years both projects will be economically equal. Hence their present value must be equal PV1 = PV2

$15,000 + $32,500/(1.06)^n = $23,000 + $23,000/(1.06)^n

$23,000 - $15,000 = $32,500/(1.06)^n - $23,000/(1.06)^n

$8,000 = $9,500/(1.06)^n

(1.06)^n = $9,500/$8,000

(1.06)^n = 1.1875

Taking log on both sides we get:

nlog1.06 = log 1.1875

n = log 1.1875/log 1.06

n = 0.07463361829/0.02530586526

n = 2.94926166417121

n = 3

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