Journal entries for Stewart for − Payment to Mason for the right to sublease the building space Its payment of the 2015 annual rent Its payment for the office improvements

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 10, Problem 8BPSB

Requirement 1

To determine

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Requirement 1

Expert Solution

Answer to Problem 8BPSB

Solution:

The requirement journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Leasehold	40,000
	Cash		40,000
	(To record the payment paid for sublease of the building space)

b.	Prepaid Rent	36,000
	Cash		36,000
	(To record the rent paid in advance for the year)

c.	Leasehold Improvements	20,000
	Cash		20,000
	(To record cost of leasehold improvements for $ 20,000)

Explanation of Solution

The above journal entries can be explained as under −

The leasehold is debited with the amount $ 40,000 as it is paid for the right to sublease the building space. The cash is credited with $ 40,000.

The rent is paid for the full year. Since, it is paid in advance for the whole year, thus, prepaid rent account is debited and the cash is credited for $ 36,000.

The leasehold improvements are incurred and thus recorded with $ 20,000 and the cash is credited with $ 20,000

Conclusion

Thus, the journal entries for Stewart for payment to Mason for the right to sublease the building space, its payment of the 2015 annual rent and its payment for the office improvements have been prepared.

Requirement 2

To determine

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Requirement 2

Expert Solution

Answer to Problem 8BPSB

Solution:

The required adjusting journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Rent Expense	8,000
	Accumulated amortization - Leasehold		8,000
	(To record amortization of $ 40,000 cost of sublease)

b.	Amortization expense - Leasehold Improvements	4,000
	Accumulated amortization - Leasehold Improvements		4,000
	(To record amortization of leasehold improvements)

c.	Rent Expense	36,000
	Prepaid Rent		36,000
	(To record adjustment entry for rent expense)

Explanation of Solution

The above journal entries can be explained as under −

The amount paid for the right to sublease will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for the right to sublease = $ 40,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 40,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 8,000

The rent expense will be debited with $ 8,000 and Accumulated amortization − Leasehold will be credited with $ 8,000

The amount paid for the office improvement will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for office improvement = $ 20,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 20,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 4,000

The Amortization expense - Leasehold Improvements will be debited with $ 4,000 and Accumulated amortization - Leasehold Improvements will be credited with $ 4,000.

Now, the rent expense will be calculated as −

Prepaid Rent = $ 36,000
Months expired in 2015 =12 months (i.e. from January to December)

Rent Expense = Prepaid Rent X ( 12 months 12 months)Rent Expense = $ 36,000

The rent expense will be debited with $ 36,000 and prepaid rent will be credited with $ 36,000.

Conclusion

Thus, the adjusting journal entries to amortize the $ 40,000 cost of the sublease, to amortize the office improvement and to record rent expense have been prepared

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

I need help with this financial accounting problem using accurate calculation methods.

What is the correct option? ? Please solve general accounting question with 100% correct solution

Value of the ending inventory under variable costing would be

Answer 2

Question

Chapter 10, Problem 8BPSB

Requirement 1

To determine

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Requirement 1

Expert Solution

Answer to Problem 8BPSB

Solution:

The requirement journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Leasehold	40,000
	Cash		40,000
	(To record the payment paid for sublease of the building space)

b.	Prepaid Rent	36,000
	Cash		36,000
	(To record the rent paid in advance for the year)

c.	Leasehold Improvements	20,000
	Cash		20,000
	(To record cost of leasehold improvements for $ 20,000)

Explanation of Solution

The above journal entries can be explained as under −

The leasehold is debited with the amount $ 40,000 as it is paid for the right to sublease the building space. The cash is credited with $ 40,000.

The rent is paid for the full year. Since, it is paid in advance for the whole year, thus, prepaid rent account is debited and the cash is credited for $ 36,000.

The leasehold improvements are incurred and thus recorded with $ 20,000 and the cash is credited with $ 20,000

Conclusion

Thus, the journal entries for Stewart for payment to Mason for the right to sublease the building space, its payment of the 2015 annual rent and its payment for the office improvements have been prepared.

Requirement 2

To determine

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Requirement 2

Expert Solution

Answer to Problem 8BPSB

Solution:

The required adjusting journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Rent Expense	8,000
	Accumulated amortization - Leasehold		8,000
	(To record amortization of $ 40,000 cost of sublease)

b.	Amortization expense - Leasehold Improvements	4,000
	Accumulated amortization - Leasehold Improvements		4,000
	(To record amortization of leasehold improvements)

c.	Rent Expense	36,000
	Prepaid Rent		36,000
	(To record adjustment entry for rent expense)

Explanation of Solution

The above journal entries can be explained as under −

The amount paid for the right to sublease will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for the right to sublease = $ 40,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 40,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 8,000

The rent expense will be debited with $ 8,000 and Accumulated amortization − Leasehold will be credited with $ 8,000

The amount paid for the office improvement will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for office improvement = $ 20,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 20,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 4,000

The Amortization expense - Leasehold Improvements will be debited with $ 4,000 and Accumulated amortization - Leasehold Improvements will be credited with $ 4,000.

Now, the rent expense will be calculated as −

Prepaid Rent = $ 36,000
Months expired in 2015 =12 months (i.e. from January to December)

Rent Expense = Prepaid Rent X ( 12 months 12 months)Rent Expense = $ 36,000

The rent expense will be debited with $ 36,000 and prepaid rent will be credited with $ 36,000.

Conclusion

Thus, the adjusting journal entries to amortize the $ 40,000 cost of the sublease, to amortize the office improvement and to record rent expense have been prepared

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 10, Problem 8BPSB

Requirement 1

To determine

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Requirement 1

Expert Solution

Answer to Problem 8BPSB

Solution:

The requirement journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Leasehold	40,000
	Cash		40,000
	(To record the payment paid for sublease of the building space)

b.	Prepaid Rent	36,000
	Cash		36,000
	(To record the rent paid in advance for the year)

c.	Leasehold Improvements	20,000
	Cash		20,000
	(To record cost of leasehold improvements for $ 20,000)

Explanation of Solution

The above journal entries can be explained as under −

The leasehold is debited with the amount $ 40,000 as it is paid for the right to sublease the building space. The cash is credited with $ 40,000.

The rent is paid for the full year. Since, it is paid in advance for the whole year, thus, prepaid rent account is debited and the cash is credited for $ 36,000.

The leasehold improvements are incurred and thus recorded with $ 20,000 and the cash is credited with $ 20,000

Conclusion

Thus, the journal entries for Stewart for payment to Mason for the right to sublease the building space, its payment of the 2015 annual rent and its payment for the office improvements have been prepared.

Requirement 2

To determine

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Requirement 2

Expert Solution

Answer to Problem 8BPSB

Solution:

The required adjusting journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Rent Expense	8,000
	Accumulated amortization - Leasehold		8,000
	(To record amortization of $ 40,000 cost of sublease)

b.	Amortization expense - Leasehold Improvements	4,000
	Accumulated amortization - Leasehold Improvements		4,000
	(To record amortization of leasehold improvements)

c.	Rent Expense	36,000
	Prepaid Rent		36,000
	(To record adjustment entry for rent expense)

Explanation of Solution

The above journal entries can be explained as under −

The amount paid for the right to sublease will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for the right to sublease = $ 40,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 40,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 8,000

The rent expense will be debited with $ 8,000 and Accumulated amortization − Leasehold will be credited with $ 8,000

The amount paid for the office improvement will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for office improvement = $ 20,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 20,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 4,000

The Amortization expense - Leasehold Improvements will be debited with $ 4,000 and Accumulated amortization - Leasehold Improvements will be credited with $ 4,000.

Now, the rent expense will be calculated as −

Prepaid Rent = $ 36,000
Months expired in 2015 =12 months (i.e. from January to December)

Rent Expense = Prepaid Rent X ( 12 months 12 months)Rent Expense = $ 36,000

The rent expense will be debited with $ 36,000 and prepaid rent will be credited with $ 36,000.

Conclusion

Thus, the adjusting journal entries to amortize the $ 40,000 cost of the sublease, to amortize the office improvement and to record rent expense have been prepared

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 8BPSB

Requirement 1

To determine

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Requirement 1

Expert Solution

Answer to Problem 8BPSB

Solution:

The requirement journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Leasehold	40,000
	Cash		40,000
	(To record the payment paid for sublease of the building space)

b.	Prepaid Rent	36,000
	Cash		36,000
	(To record the rent paid in advance for the year)

c.	Leasehold Improvements	20,000
	Cash		20,000
	(To record cost of leasehold improvements for $ 20,000)

Explanation of Solution

The above journal entries can be explained as under −

The leasehold is debited with the amount $ 40,000 as it is paid for the right to sublease the building space. The cash is credited with $ 40,000.

The rent is paid for the full year. Since, it is paid in advance for the whole year, thus, prepaid rent account is debited and the cash is credited for $ 36,000.

The leasehold improvements are incurred and thus recorded with $ 20,000 and the cash is credited with $ 20,000

Conclusion

Thus, the journal entries for Stewart for payment to Mason for the right to sublease the building space, its payment of the 2015 annual rent and its payment for the office improvements have been prepared.

Requirement 2

To determine

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Requirement 2

Expert Solution

Answer to Problem 8BPSB

Solution:

The required adjusting journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Rent Expense	8,000
	Accumulated amortization - Leasehold		8,000
	(To record amortization of $ 40,000 cost of sublease)

b.	Amortization expense - Leasehold Improvements	4,000
	Accumulated amortization - Leasehold Improvements		4,000
	(To record amortization of leasehold improvements)

c.	Rent Expense	36,000
	Prepaid Rent		36,000
	(To record adjustment entry for rent expense)

Explanation of Solution

The above journal entries can be explained as under −

The amount paid for the right to sublease will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for the right to sublease = $ 40,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 40,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 8,000

The rent expense will be debited with $ 8,000 and Accumulated amortization − Leasehold will be credited with $ 8,000

The amount paid for the office improvement will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for office improvement = $ 20,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 20,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 4,000

The Amortization expense - Leasehold Improvements will be debited with $ 4,000 and Accumulated amortization - Leasehold Improvements will be credited with $ 4,000.

Now, the rent expense will be calculated as −

Prepaid Rent = $ 36,000
Months expired in 2015 =12 months (i.e. from January to December)

Rent Expense = Prepaid Rent X ( 12 months 12 months)Rent Expense = $ 36,000

The rent expense will be debited with $ 36,000 and prepaid rent will be credited with $ 36,000.

Conclusion

Thus, the adjusting journal entries to amortize the $ 40,000 cost of the sublease, to amortize the office improvement and to record rent expense have been prepared

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 8BPSB

Requirement 1

To determine

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Requirement 1

Expert Solution

Answer to Problem 8BPSB

Solution:

The requirement journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Leasehold	40,000
	Cash		40,000
	(To record the payment paid for sublease of the building space)

b.	Prepaid Rent	36,000
	Cash		36,000
	(To record the rent paid in advance for the year)

c.	Leasehold Improvements	20,000
	Cash		20,000
	(To record cost of leasehold improvements for $ 20,000)

Explanation of Solution

The above journal entries can be explained as under −

The leasehold is debited with the amount $ 40,000 as it is paid for the right to sublease the building space. The cash is credited with $ 40,000.

The rent is paid for the full year. Since, it is paid in advance for the whole year, thus, prepaid rent account is debited and the cash is credited for $ 36,000.

The leasehold improvements are incurred and thus recorded with $ 20,000 and the cash is credited with $ 20,000

Conclusion

Thus, the journal entries for Stewart for payment to Mason for the right to sublease the building space, its payment of the 2015 annual rent and its payment for the office improvements have been prepared.

Requirement 2

To determine

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Requirement 2

Expert Solution

Answer to Problem 8BPSB

Solution:

The required adjusting journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Rent Expense	8,000
	Accumulated amortization - Leasehold		8,000
	(To record amortization of $ 40,000 cost of sublease)

b.	Amortization expense - Leasehold Improvements	4,000
	Accumulated amortization - Leasehold Improvements		4,000
	(To record amortization of leasehold improvements)

c.	Rent Expense	36,000
	Prepaid Rent		36,000
	(To record adjustment entry for rent expense)

Explanation of Solution

The above journal entries can be explained as under −

The amount paid for the right to sublease will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for the right to sublease = $ 40,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 40,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 8,000

The rent expense will be debited with $ 8,000 and Accumulated amortization − Leasehold will be credited with $ 8,000

The amount paid for the office improvement will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for office improvement = $ 20,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 20,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 4,000

The Amortization expense - Leasehold Improvements will be debited with $ 4,000 and Accumulated amortization - Leasehold Improvements will be credited with $ 4,000.

Now, the rent expense will be calculated as −

Prepaid Rent = $ 36,000
Months expired in 2015 =12 months (i.e. from January to December)

Rent Expense = Prepaid Rent X ( 12 months 12 months)Rent Expense = $ 36,000

The rent expense will be debited with $ 36,000 and prepaid rent will be credited with $ 36,000.

Conclusion

Thus, the adjusting journal entries to amortize the $ 40,000 cost of the sublease, to amortize the office improvement and to record rent expense have been prepared

Answer 6

Chapter 10, Problem 8BPSB

Requirement 1

To determine

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Requirement 1

Expert Solution

Answer to Problem 8BPSB

Solution:

The requirement journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Leasehold	40,000
	Cash		40,000
	(To record the payment paid for sublease of the building space)

b.	Prepaid Rent	36,000
	Cash		36,000
	(To record the rent paid in advance for the year)

c.	Leasehold Improvements	20,000
	Cash		20,000
	(To record cost of leasehold improvements for $ 20,000)

Explanation of Solution

The above journal entries can be explained as under −

The leasehold is debited with the amount $ 40,000 as it is paid for the right to sublease the building space. The cash is credited with $ 40,000.

The rent is paid for the full year. Since, it is paid in advance for the whole year, thus, prepaid rent account is debited and the cash is credited for $ 36,000.

The leasehold improvements are incurred and thus recorded with $ 20,000 and the cash is credited with $ 20,000

Conclusion

Thus, the journal entries for Stewart for payment to Mason for the right to sublease the building space, its payment of the 2015 annual rent and its payment for the office improvements have been prepared.

Answer 7

Chapter 10, Problem 8BPSB

Requirement 1

To determine

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Answer 8

Requirement 1

Expert Solution

Answer to Problem 8BPSB

Solution:

The requirement journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Leasehold	40,000
	Cash		40,000
	(To record the payment paid for sublease of the building space)

b.	Prepaid Rent	36,000
	Cash		36,000
	(To record the rent paid in advance for the year)

c.	Leasehold Improvements	20,000
	Cash		20,000
	(To record cost of leasehold improvements for $ 20,000)

Answer 9

Requirement 1

Expert Solution

Answer 10

Requirement 1

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

The above journal entries can be explained as under −

The leasehold is debited with the amount $ 40,000 as it is paid for the right to sublease the building space. The cash is credited with $ 40,000.

The rent is paid for the full year. Since, it is paid in advance for the whole year, thus, prepaid rent account is debited and the cash is credited for $ 36,000.

The leasehold improvements are incurred and thus recorded with $ 20,000 and the cash is credited with $ 20,000

Answer 13

Conclusion

Thus, the journal entries for Stewart for payment to Mason for the right to sublease the building space, its payment of the 2015 annual rent and its payment for the office improvements have been prepared.

Answer 14

Requirement 2

To determine

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Requirement 2

Expert Solution

Answer to Problem 8BPSB

Solution:

The required adjusting journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Rent Expense	8,000
	Accumulated amortization - Leasehold		8,000
	(To record amortization of $ 40,000 cost of sublease)

b.	Amortization expense - Leasehold Improvements	4,000
	Accumulated amortization - Leasehold Improvements		4,000
	(To record amortization of leasehold improvements)

c.	Rent Expense	36,000
	Prepaid Rent		36,000
	(To record adjustment entry for rent expense)

Explanation of Solution

The above journal entries can be explained as under −

The amount paid for the right to sublease will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for the right to sublease = $ 40,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 40,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 8,000

The rent expense will be debited with $ 8,000 and Accumulated amortization − Leasehold will be credited with $ 8,000

The amount paid for the office improvement will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for office improvement = $ 20,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 20,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 4,000

The Amortization expense - Leasehold Improvements will be debited with $ 4,000 and Accumulated amortization - Leasehold Improvements will be credited with $ 4,000.

Now, the rent expense will be calculated as −

Prepaid Rent = $ 36,000
Months expired in 2015 =12 months (i.e. from January to December)

Rent Expense = Prepaid Rent X ( 12 months 12 months)Rent Expense = $ 36,000

The rent expense will be debited with $ 36,000 and prepaid rent will be credited with $ 36,000.

Conclusion

Thus, the adjusting journal entries to amortize the $ 40,000 cost of the sublease, to amortize the office improvement and to record rent expense have been prepared

Answer 15

Requirement 2

To determine

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Answer 16

Requirement 2

Expert Solution

Answer to Problem 8BPSB

Solution:

The required adjusting journal entries are −

	Accounts Titles and Descriptions	Debit	Credit
a.	Rent Expense	8,000
	Accumulated amortization - Leasehold		8,000
	(To record amortization of $ 40,000 cost of sublease)

b.	Amortization expense - Leasehold Improvements	4,000
	Accumulated amortization - Leasehold Improvements		4,000
	(To record amortization of leasehold improvements)

c.	Rent Expense	36,000
	Prepaid Rent		36,000
	(To record adjustment entry for rent expense)

Answer 17

Requirement 2

Expert Solution

Answer 18

Requirement 2

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

The above journal entries can be explained as under −

The amount paid for the right to sublease will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for the right to sublease = $ 40,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 40,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 8,000

The rent expense will be debited with $ 8,000 and Accumulated amortization − Leasehold will be credited with $ 8,000

The amount paid for the office improvement will be amortized using the remaining life of the asset and the months expired in the year 2015.

Amount paid for office improvement = $ 20,000
Remaining life of lease = 5 years
Months expired in 2015 = 12 months (i.e. from January to December)

Amortized amount = ( Amount paid Remaining life of lease ) X ( Months expired in 2015 12 months )Amortized amount = ( $ 20,000 5 years ) X ( 12 months 12 months )Amortized amount = $ 4,000

The Amortization expense - Leasehold Improvements will be debited with $ 4,000 and Accumulated amortization - Leasehold Improvements will be credited with $ 4,000.

Now, the rent expense will be calculated as −

Prepaid Rent = $ 36,000
Months expired in 2015 =12 months (i.e. from January to December)

Rent Expense = Prepaid Rent X ( 12 months 12 months)Rent Expense = $ 36,000

The rent expense will be debited with $ 36,000 and prepaid rent will be credited with $ 36,000.

Answer 21

Conclusion

Thus, the adjusting journal entries to amortize the $ 40,000 cost of the sublease, to amortize the office improvement and to record rent expense have been prepared

Answer 22

Ch. 10 - Prob. 1DQ Ch. 10 - Prob. 2DQ Ch. 10 - Prob. 3DQ Ch. 10 - Prob. 4DQ Ch. 10 - Prob. 5DQ Ch. 10 - Prob. 6DQ Ch. 10 - Prob. 7DQ Ch. 10 - Prob. 8DQ Ch. 10 - Prob. 9DQ Ch. 10 - Prob. 10DQ

Journal entries for Stewart for − Payment to Mason for the right to sublease the building space Its payment of the 2015 annual rent Its payment for the office improvements

Concept explainers

Videos

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

Answer to Problem 8BPSB

Explanation of Solution

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense

Answer to Problem 8BPSB

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

Journal entries for Stewart for − Payment to Mason for the right to sublease the building space Its payment of the 2015 annual rent Its payment for the office improvements

Concept explainers

Videos

To prepare: Journal entries for Stewart for − Payment to Mason for the right to sublease the building space Its payment of the 2015 annual rent Its payment for the office improvements

Answer to Problem 8BPSB

Explanation of Solution

To prepare: Adjusting journal entries to − To amortize the $ 40,000 cost of the sublease To amortize the office improvement To record rent expense

Answer to Problem 8BPSB

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

To prepare:

Journal entries for Stewart for −

Payment to Mason for the right to sublease the building space

Its payment of the 2015 annual rent

Its payment for the office improvements

To prepare:

Adjusting journal entries to −

To amortize the $ 40,000 cost of the sublease

To amortize the office improvement

To record rent expense