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You are auditing a new client that just started business in the current year. They signed a 5 year lease for their building. The lease began on July...

5.             You are auditing a new client that just started business in the current year. They signed a 5 year lease for their building. The lease began on July 1, 2014. Their GL shows $0 rent expense for 2014. The lease requires payments as follows.  

a.             Free rent for 6 months

b.             $1,000/month for 2015

c.             $1,200/month for 2016

d.             $1,300/month for 2017

e.             $1,400/month for 2018

f.              $1,500/month for last 6 months through June 30, 2019

·      What entry, if any, do you need to record at YE 2014. Why?

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No entries need to be... View the full answer

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Lease Payments: The amount paid, regularly, by the... View the full answer

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4 comments
  • I know the journal entry for 7/1/, but what is the journal entry for year end 2014?
    • MINTmintgreen
    • Jun 06, 2018 at 11:56pm
  • is debit rent expense
    • MINTmintgreen
    • Jun 07, 2018 at 12:03am
  • and there is no term "lease payable" when I search on google doc
    • MINTmintgreen
    • Jun 07, 2018 at 12:16am
  • if it is a finance lease, then depreciation on asset shall be book at the year end 2014 and transfer to Profit & Loss Accounts,
    • Aanchal27
    • Jun 07, 2018 at 2:22am

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