Office Rental, Inc. owns an office building that it rents to Watson Company. The building is in a location that is not very desirable. To provide an incentive for Watson to rent the building, Office Rental, Inc. collects rent at the end of each 6 months. The following is data for the office building: Office Building – Located at 123 ItsADump Drive Rental rate ........................................................................................ $450 per month Date when the 6 months of rent for January to June is collected ...... June 30 Date when the 6 months of rent for July to December is collected .... December 31 The office building located at 123 ItsADump Drive is the only rental property owned by Office Rental, Inc. After making the April 30, 2021 Rent Receivable adjusting entry, the balance in Office Rental Inc.’s Rent Receivable account is $1,800. This balance represents 4 month’s (Jan., Feb., Mar., Apr.) of rent due from Watson. The following is a partial list of the accounts in Office Rental Inc.’s General Ledger. These are the only accounts you need for this problem. Cash Rent Receivable (asset account) Rent Revenue (revenue account Requirement 1 Prepare the May 31, 2021 General Journal adjusting entry to accrue May’s Rent Receivable. Requirement 2 What would be the amount of Rent Receivable shown on Office Rental Inc.’s Balance Sheet as of May 31, 2021? What would be the amount of Rent Revenue on Office Rental Inc.’s Income Statement for the period May 1 to May 31, 2021? Requirement 3 Prepare the June 30, 2021 General Journal entry to record the receipt of cash by Office Rental, Inc. from Watson for the 6 months of rent from January to June. Hint: The account names have been put in the General Journal.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
9-4
Office Rental, Inc. owns an office building that it rents to Watson Company. The building is in a
location that is not very desirable. To provide an incentive for Watson to rent the building, Office
Rental, Inc. collects rent at the end of each 6 months. The following is data for the office building:
Office Building – Located at 123 ItsADump Drive
Rental rate ........................................................................................ $450 per month
Date when the 6 months of rent for January to June is collected ...... June 30
Date when the 6 months of rent for July to December is collected .... December 31
The office building located at 123 ItsADump Drive is the only rental property owned by Office
Rental, Inc.
After making the April 30, 2021 Rent Receivable
Rent Receivable account is $1,800. This balance represents 4 month’s (Jan., Feb., Mar., Apr.) of
rent due from Watson.
The following is a partial list of the accounts in Office Rental Inc.’s General Ledger. These are the
only accounts you need for this problem.
Cash
Rent Receivable (asset account)
Rent Revenue (revenue account
Requirement 1
Prepare the May 31, 2021 General Journal adjusting entry to accrue May’s Rent Receivable.
Requirement 2
What would be the amount of Rent Receivable shown on Office Rental Inc.’s
Sheet
What would be the amount of Rent Revenue on Office Rental Inc.’s Income Statement for
the period May 1 to May 31, 2021?
Requirement 3
Prepare the June 30, 2021 General
Inc. from Watson for the 6 months of rent from January to June.
Hint: The account names have been put in the General Journal.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
