In December Craig paid $112 for equipment rental and recorded it as Equipment Rental, an Expenses account. But the $112 was prepaid to reserve the equipment for use in January of next year. So at the end of the accounting period on December 31, the benefits of the $112 had not expired and would not be Equipment Rental Expense, but Prapaid Rent Expense, an asset with future benefit. Since Craig recorded the entire $112 as Equipment Rental Expense, and adjusting entry is needed to bring accounts up to date at December 31.
In December Craig paid $112 for equipment rental and recorded it as Equipment Rental, an Expenses account. But the $112 was prepaid to reserve the equipment for use in January of next year. So at the end of the accounting period on December 31, the benefits of the $112 had not expired and would not be Equipment Rental Expense, but Prapaid Rent Expense, an asset with future benefit. Since Craig recorded the entire $112 as Equipment Rental Expense, and adjusting entry is needed to bring accounts up to date at December 31.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 8RE: At the end of 2019, Framber Company received 8,000 as a prepayment for renting a building to a...
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In December Craig paid $112 for equipment rental and recorded it as Equipment Rental, an Expenses account. But the $112 was prepaid to reserve the equipment for use in January of next year. So at the end of the accounting period on December 31, the benefits of the $112 had not expired and would not be Equipment Rental Expense, but Prapaid Rent Expense, an asset with future benefit. Since Craig recorded the entire $112 as Equipment Rental Expense, and
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