Financial Act Demonsration Problem #1

1 2 3 transaction paying rent in advance so amount

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Unformatted text preview: saction: Paying rent in advance, so amount paid a future economic benefit (for next two months). Asset is increasing (Prepaid Rent) and Asset is decreasing (Cash). Rules: Increases to assets are debited, decreases to assets are credited. Journal entry: Debit to Prepaid Rent, Credit to Cash Jan 2 Prepaid Rent Cash Dr. 800 Cr. 800 Post to the general ledger: 4. Prepaid Rent Cash 1/2 800 1/110,000 January 4: Purchases office equipment from Staples for $1500. Pays $750 now, and agrees to pay $750 by February f t . 1. 2. 3. Transaction: Buying equipment, and making a partial payment. Equipment will have future e...
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