On 1 January 2016 Oshimbala Foods Ltd signed a 3-year rental agreement on a new outlet to be opened in Maruua Mall. The business was able to negotiate a very good deal on this 3-year rental agreement. For the first year of the agreement, Oshimbala Foods Ltd will not have to pay any rent on the outlet. In the second year of the contract, the business will pay N$ 2 500 rental per month and in the third (last) year of the agreement Oshimbala Foods Ltd will pay N$ 5 000 per month. The accountant of Oshimbala Foods Ltd did not recognize any entries in the accounting records of the business for the period ended 31 October 2016 since no payments had to be made during the first year of the agreement. Provide the journal entry (if any) to appropriately account for the rental agreement in the accounting records of Oshimbala Foods Ltd for the reporting period ended 31 October 2016
On 1 January 2016 Oshimbala Foods Ltd signed a 3-year rental agreement on a new outlet to be opened in Maruua Mall. The business was able to negotiate a very good deal on this 3-year rental agreement. For the first year of the agreement, Oshimbala Foods Ltd will not have to pay any rent on the outlet. In the second year of the contract, the business will pay N$ 2 500 rental per month and in the third (last) year of the agreement Oshimbala Foods Ltd will pay N$ 5 000 per month. The accountant of Oshimbala Foods Ltd did not recognize any entries in the accounting records of the business for the period ended 31 October 2016 since no payments had to be made during the first year of the agreement.
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