Libby_7e_MBA_Companion_Solutions

Answer rent expense e se 10000 cash a assets 10000

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: +E, –SE) 10,000 Cash (–A) Assets 10,000 = Liabilities + Cash –10,000 LO 2 Stockholders’ Equity Rent expense (+E) –10,000 S E-2 Depreciating leasehold improvements At the beginning of its first fiscal quarter, Caribou Coffee signed a 5-year lease for retail space in the Ithaca Mall. Before opening the space, Caribou made various leasehold improvements, one of which was to build a new coffee counter where customers can watch baristas make their espresso drinks. The cost to build the coffee counter was $12,500, which Caribou paid with cash. The counter is expected to provide benefits for the duration of the lease. Caribou depreciates equipment on a quarterly basis using the straight-line method of depreciation. Prepare the journal entry to record the depreciation of the coffee counter at the end of the first quarter. Assume that Caribou take a full quarter of depreciation during the first quarter. ANSWER Depreciation expense (+E, –SE) 625 ($12,500 / 20 quarters) Accumulated depreciation (+XA, –A) Assets = Liabilities 625 + Accumulated depreciation (+XA) –625 LO 1 LO 3 Stockholders’ Equity Depreciation expense (+E) –625 S E-3 Depreciating and amortizing lease assets and liabilities On January 1, 2010, Google Corporation leases a package of high-speed servers by signing a 5-year capital lease. Lease paym...
View Full Document

Ask a homework question - tutors are online