St. Leo ACC 201 CH 3 #1.docx - a Depreciation $ 700$700 Depreciation is the systematic allocation of the cost of a long-lived asset over the expected

St. Leo ACC 201 CH 3 #1.docx - a Depreciation $ 700$700...

This preview shows page 1 - 2 out of 3 pages.

a. Depreciation, $ 700$700. Depreciation is the systematic allocation of the cost of a long-lived asset over the expected useful life of that asset. When depreciation is recorded, Depreciation Expense is increased (debited) and Accumulated Depreciation, a contra asset account, is increased (credited.) Go ahead and prepare the entry. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit (a) Jul. 31 Depreciation Expense 700 Accumulated Depreciation 700 To record depreciation. b. Prepaid rent expires, $ 500$500. (Assume that BMPBMP debits an asset account when rent is paid in advance.) Prepaid assets represent cash paid for goods or services in advance of the receipt of the goods or serviceslong dash in this instance, rent. As the services are used, the prepaid asset decreases and the service used is recorded as an expense. Refer to the rules LOADING... of debits and credits and normal balances of accounts. Note that, as an asset account, Prepaid Rent has a normal debit balance. As such, debits are used to increase the balance of the account and credits are used to reduce it. Go ahead and prepare the entry to journalize the expiration of the prepaid rent. Date Accounts and Explanation Debit Credit (b) Jul. 31 Rent Expense 500 Prepaid Rent 500 To record rent expense. c. Interest expense accrued, $ 300$300. Accruals represent expenses and earnings that have been incurred or rendered prior to the actual payment or receipt of cash. An accrual of interest means there is an obligation to pay the interest in the future, but it is an expense of the current period. Go ahead and prepare the entry.
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Spring '09
  • Pendarvis

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes