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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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