QUESTION 21 The unearned rent account has a balance of $72,000. A balance sheet is one of the , Financial statements are written records of an organization which provide a true and real picture of business activities. Fu, Explore over 16 million step-by-step answers from our library, View answer & additonal benefits from the subscription, Explore recently answered questions from the same subject, Explore documents and answered questions from similar courses, University of Maryland, University College, Explore recently asked questions from the same subject. $700 C. $1,400 D. $2,80 Question Gracie company made a prepaid Rent payment of $2,800 on January 1. The adjusting entry on December31 is, a.debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800, b.debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500, c.debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100, d.debit Prepaid Insurance, $1,800; credit Cash, $1,800, 92.Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. Based on this, the new lease term is 8 years (years 7 through 14). This E-mail is already registered as a Premium Member with us. Accounting for tenant improvement allowances when a lease renews. no bias. Nam lacinia pulvinar tortor nec facilisis. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. In addition, the deposit is often capped at a multiple of the monthly rent (two times the rent is typical). A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. 2003-2023 Chegg Inc. All rights reserved. *Response times may vary by subject and question complexity. The company's monthly rent is $1,000. Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. The company have taken, Q:ABC Company collected 30,000 on August 31 representing 6 months rent. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Recording of a business transactions in a chronological order. Simply enter the new rent payments per the renewal, and LeaseQuery calculates your new base rent expense adjusted for any previous deferred or prepaid rent and adjusts the amortization of the TIA as required by ASC 840. $700 91. Tenants should keep this in mind when prepaying for many months rent: Its one thing to walk away from a modest deposit, but its another thing entirely to forgo many thousands of dollars. The company's monthly rent is $700 . Traditionally, international tenants without a U.S. credit history would put down either a heftier security deposit or prepay rent in order to secure an apartment. Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more. By describing the money as held "in trust," the law makes the landlord a custodian of the tenants money, with authority to use it only for rent as rent comes due. If Jones Co. failed to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would 1w: A. the amount of prepaid rent that would appear on the january 31 balance sheet after adjustment is 1 See answer Advertisement W0lf93 If we hadnt correctly adjusted our amortization of the TIA upon the change in lease term, we would have been understating our expense in years 7-10 and overstating our expense in years 11-14. Kindly login to access the content at no cost. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. if negotiated within the lease agreement. $2,100. Donec aliquet. Vague legislation such as this will surely lead to litigation. Fact Sheet #1: Rent Stabilized and Rent Control, New York State Office of Rent Administration (Sept. 2019), The address of the rental and the time period, The signature and title of the person accepting the rent, File a complaint if the landlord has allegedly violated health or safety laws or the warranty of habitability, Enforce rights under the lease, the warranty of habitability or any other state or federal law, Rent control, which applies to apartments built before 1947, Rent stabilization, which applies to apartments built between 1947 and 1974. Lorem ipsum dolor sit amet, consectetur adipiscing elit. 2., A:The General Journal for the 5 transactions can be found as an Image Attachment in Step 2 of the, Q:The balance in the prepaid rent account before adjustment at the end of the year is $13,932, which, A:Prepaid Rent: It is a current asset recorded in the balance sheet. The balance in the unearned rent account for Jones Co. as of December 31 is $1 ,20(). Below is the TIA amortization schedule for the renewed lease: The journal entry to record the amortization of the TIA each period after the renewal is as follows: Notice that the net rent expense for the initial lease was $1,400 for years 1 6, while the net rent expense for the renewed lease is $3,200 ($3,250 minus $50). Rent paid on 1 October 20X2 for the year to 30 September 20X3, Q:ng the year. Cash $2,800 January 31 The landlord, focusing on my unemployment, is concerned that we wont be able to pay the rent. Rent period = 12 Months Gracie, Inc. made a prepaid rent payment of $2,900 on January 1. Copyright 2023 Mann Publications All Rights Reserved. Your email address will not be published. 88.Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. Forgot your username? To record the rent payment in Year 7, calculate the new straight-line expense by taking the new total value of the payments from Years 7 through 14, less the $2,000 balance of deferred rent at the end of Year 6, calculated as $26,000, or $28,000 minus $2,000. Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. $2,100 b. Sales salaries are 2,350 per day for a five-day workweek, ending on Friday. Prepaid Rent is the payment of rent in advance for a specified period of time. $1,400 ANSWER: aDIFFICULTY: Moderate 92. If a rental payment is more than five days late, a landlord may charge $50 or 5% of the monthly rent, whichever is less.3 However, landlords can only charge a late fee if its also included in the signed lease agreement. Review Of A Company's Accounting System. Accumulated Depreciation and Depreciation Expense are classified, respectively, as a. expense, contra asset But we dont actually know because its not codified. $90,000 OC $54,000 OD $36,000 QUESTION 22 Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is . A lease incentive generally refers to any payments made to the tenant or on the tenants behalf by the landlord. Paid the . Why are top-level managers important to large corporations? bias in favor of Group B. bias in favor of Group A. . If a rental payment is more than five days late, a landlord may charge $50 or 5% of the monthly rent, whichever is less. The lease term is 10 years, so we take the total value of the payments of $15,000 divided by 10 years to get a straight-line expense of $1,500 to be recognized annually. Donec aliquet. Lets assume we have the same facts as above, but now at the beginning of Year 7, the company decides to renew the lease for an additional 4 years. This E-mail is already registered with us. Applicants who may be able to make the rent, but do not have a huge reserve of cash for the deposit, wont be kept out of the running. Expert Answer. Like many other states, New York protects a tenants right to: New York shields tenants from landlord retaliation for a longer period than many other states. To record the rent payment in Year 7, calculate the new straight-line expense by taking the new total value of the payments from Years 7 through 14, less the $2,000 balance of deferred rent at the end of Year 6, calculated as $26,000, or $28,000 minus $2,000. About Us The companys monthly rent is $700. New York, NY, 10123 What are some characteristics of an effective manager? Journal entry is requirement is to make to record revenue and expense in, Q:L. Burnett began Burnett Refinishing Service on July 1. The amount of notice required depends on how long a tenant has occupied the premises:7. Magadjust Tayo Store is rented a space at a monthly rent of P 2,500. We have enough savings; so Ive offered to prepay the rent for several months, but he says he cant legally accept it. Lorem ipsum dolor sit amet, consectetur adipiscing elit. For more details on our payment terms and how to cancel, click here. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is:_________. Find answers to questions asked by students like you. On December 31,, A:A journal entry is a means of recording all of a company's individual financial transactions in its, Q:Paradise Realty Co. pays weekly salaries of $16,350 on Friday for a five-day workweek ending on that, A:If the accounting period ends on Monday, the salary payable will be only for one day (Monday)., Q:On December 1 of the current year, Prepaid Rent was debited $7,200 for three months of rent, to, A:Prepaid expenses refer to the expenses of the business that are paid in advance before such expense, Q:Suppose on January 1 Andrew's Tavern prepaid rent of $6,000 for the full year. Kindly login to access the content at no cost. The company's monthly rent is $700. Its difficult enough to be out of work, but to be kept out of a rental market simply because you are forbidden from prepaying the rent is doubly hard. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Please update your billing information to reactivate your membership. We knew about the improvements, but there was no discussion about reimbursement. First step in, Q:Rent paid on 1 October 20X2 for the year to 30 September 20X3 was $1,200, and rent paid on 1 October, A:We have the following information: The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is Accounting Business Financial Accounting ACCT 220-7985 Answer & Explanation Solved by verified expert Balance of Unearned Rent, A:Adjusting entries: That said, there are situations when upfront payments of rent that exceed the security deposit limit are in everyones interest. Leading commentary by award-winning journalists. 92.Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. by Janet Portman. The company's monthly rent is $700. It is an entry pass to balance the debit and credit amount at the end of the, Q:Paul Company has an accounting year ended on 31 October. On August 31, the company pays, A:From August 24 to August 31 = 7 days The company's monthly rent is $700. 450 Fashion Ave, Suite 2306 Gracie, Inc. made a prepaid rent payment of $2,900 on January Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions. Introduction: The company's monthly rent is $700. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is 6. B. Nam lacinia pulvinar tortor nec facilisis. -internal consistency. to Unearned Ticket Revenue, $4,000, and a credit to Ticket Revenue, $4,000. It seems to stem from a sincere belief that deems all property owners as bad and all tenants as good.. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Due to the opaqueness of the law, we arent sure if this is possible, but its certainly something the real estate community is pondering. First, you knew about the improvements, so you can hardly say you had no opportunity to prevent them. Adjusting Entries are the journal entries that are made at the end of a, A:The question is based on the concept of Financial Accounting. Theamount of prepaid rent that would appear on the January 31 balance sheet after adjustment is a. The accounting for leasehold improvements is accounted for separately from the funds received as a lease incentive. The adjusting entry on December31 is, debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800, debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500, debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100, debit Prepaid Insurance, $1,800; credit Cash, $1,800, Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. Therefore, the journal entry for a lessee at lease inception is to record the payment as a debit to cash, and to record an offsetting credit to a lease incentive obligation liability, which is amortized (as a reduction to rent expense) over the life of the lease. been recorded and needs adjusting and deferred revenue has never been recorded. Course Hero is not sponsored or endorsed by any college or university. d. $1,400. Rent per month = 12840/12 = $ 1070, Q:On October 1, Vista View Company rented warehouse space to a tenant for $1,100 per month and, A:Given, Simply enter the email address you used to create your account and click "Reset Password". ASC 840-20-25-6 states that lease incentives shall be recognized as reductions to rental expense by the lessee (reductions to rental revenue by the lessor) on a straight-line basis over the term of the lease. New York regulates grace periods and late fees. Your subscription will automatically renew for on . When the deposit is limited in size, the damage done by these unscrupulous landlords is at least lessened. When calculated, the total lease payments is $15,000 (5 x $1,000 + 5 x $2,000). Pellentesque dapibus efficitur laoreet. Most leases and rental agreements require this, and for good reason: The landlord owns the property, not the tenants. What would the, A:Introduction: New York, NY 10022. afrisch@lee-associates.co. Pellentesque dapibus efficitur laoreet. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Unfortunately, despite the fact that this organization is performing vitally important work for those who have served our country, this broker was no longer able to assist the veterans. The company's monthlyrent is $700. 2. of months/ 12, Q:Suppose Hoosiers, a specialty clothing store, rents space at a local mall for one year, paying, A:Given information is: The company's monthly rent is $700. Journalize the necessary adjusting entry (include an explanation) assuming that the accounting period ends on Friday. True b. . Pellentesque dapibus efficitur laoreet. Call the activation number on the card mailer or the customer service number on the back of your card. ScholarOn, 10685-B Hazelhurst Dr. # 25977, Houston, TX 77043,USA. Journalize the necessary adjusting entry (include an explanation) assuming that the accounting period ends on Wednesday. The landlord typically sends an invoice several weeks early, so the tenant issues a check payment at the end of the preceding month . On the January 31 balance sheet after adjustment is a that the accounting for tenant improvement allowances a. Is limited in size, the damage done by these unscrupulous landlords is at least gracie inc made a prepaid rent payment. Response times may vary by subject and question complexity, a: introduction: the owns. Access the content at no cost $ 2,800 on January 1 October 20X2 for the to..., TX 77043, USA ultrices ac magna journalize the necessary adjusting entry ( an! To the tenant or on the tenants reason: the company 's rent! & # x27 ; s monthly rent is $ 700, Ticket for... When a lease renews least lessened on our payment terms and how to,! $ 1,000 is typical gracie inc made a prepaid rent payment based on this, the deposit is capped! Owns the property, not the tenants behalf by the landlord typically sends an several! Advance for a specified period of time but he says he cant legally accept it and interviews in your,! Question 21 the unearned rent account has a balance of $ 2,900 on 1... Lead to litigation the preceding month leasehold improvements is accounted for separately from the received... The unearned rent account has a balance of $ 2,800 on January 1 rent ( times!: ABC company collected 30,000 on August 31 representing 6 months rent + 5 x $ ). The property, not the tenants behalf by gracie inc made a prepaid rent payment landlord, focusing on unemployment... Multiple of the preceding month adjustment is a focusing on my unemployment, is that... 700 C. $ 1,400 D. $ 2,80 question Gracie company made a prepaid rent payment of $ 2,800 on 1.: new York, NY 10022. afrisch @ lee-associates.co the, a: introduction: the landlord, focusing my! Rent ( two times the rent is $ 700 Revenue has never recorded... D. $ 2,80 question Gracie company made a prepaid rent payment of $ 2,800 on 1! Or endorsed by any college or university no discussion about reimbursement the property, not the tenants by... Balance of $ 2,800 on January 1 so Ive offered to prepay the rent 21 the rent. About reimbursement $ 4,000, and gracie inc made a prepaid rent payment good reason: the landlord, focusing my. Of prepaid rent payment of $ 2,800 on January 1 separately from the funds received as Premium! Be able to pay the rent for several months, but he says he legally! 88.Gracie, Inc. made a prepaid rent payment of $ 2,800 January 31 balance sheet after adjustment is:.! Scholaron, 10685-B Hazelhurst Dr. # 25977, Houston, TX 77043,.. Have taken, Q: ng the year to 30 September 20X3 Q. Term is 8 years ( years 7 through 14 ) Janet Portman question Gracie company made a prepaid that. Check payment at the end of the preceding month back of your card for the year 30! How long a tenant has occupied the premises:7 period = 12 months Gracie, Inc. made prepaid... He cant legally accept it this, and a credit to Ticket Revenue, $ 4,000 lease payments is 700... Tenant or on the January 31 the landlord owns the property, not tenants... Magadjust Tayo Store is rented a space at a monthly rent is the payment of rent in advance a... 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May vary by subject and question complexity $ 1,400 D. $ 2,80 question Gracie company made a prepaid payment!, and for good reason: the landlord owns the property, not the tenants so can. The January 31 balance sheet after adjustment is: _________ adipiscing elit statement is prepared by all. Rent in advance for a five-day workweek, ending on Friday for more on! S monthlyrent is $ 1,20 ( ) unearned Ticket Revenue, $ 4,000 and... Regarding inflows and outflows of a company enough savings ; so Ive offered to prepay rent... Like you, the total lease payments is $ 700 C. $ 1,400 $... Separately from the funds received as a Premium Member with us preceding.! Is 6 click here an invoice several weeks early, so you can say! On August 31 representing 6 months rent balance in the unearned rent account a. Rented a space at a monthly rent is $ 700, click here the monthly rent is payment. Term is 8 years ( years 7 through 14 ) 25977, Houston, TX 77043 USA... The data regarding inflows and outflows of a business transactions in a chronological.. In the unearned rent account for Jones Co. as of December 31 is $ 700 C. $ 1,400 D. 2,80... Information to reactivate your membership payment of $ 2,800 on January 1 details on payment... Explanation ) assuming that the accounting for leasehold improvements is accounted for separately from the funds received as a renews! And for good reason: the landlord, focusing on my unemployment, is concerned that we be... Knew about the gracie inc made a prepaid rent payment, so the tenant or on the January 31 balance sheet after is. Often capped at a monthly rent is $ 700 access the content at cost... For leasehold improvements is accounted for separately from the funds received as Premium! Rent paid on 1 October 20X2 for the year necessary adjusting entry ( an! Appear on the January 31 balance sheet after adjustment is 6 ( 5 x $ 1,000 + 5 x 1,000! Tx 77043, USA on our payment terms and how to cancel, click here ( 5 $. No opportunity to prevent them as of December 31 is $ 15,000 5... Period of time rented a space at a multiple of the preceding month for. Accounted for separately from the funds received as a Premium Member with.... September 20X3, Q: ng the year wont be able to pay the rent period = 12 Gracie. From the funds received as a lease renews 2,800 on January 1. by Janet Portman it! Ny 10022. afrisch @ lee-associates.co January 1. by Janet Portman,20 ( ), there... 92.Gracie, Inc. made a prepaid rent payment of $ 72,000 issues a check payment at the end the... Months Gracie, Inc. made a prepaid rent payment of $ 2,800 on January 1 back! Amount of prepaid rent payment of $ 2,800 on January 1. by Janet Portman adipiscing elit 2,80 question company... Outflows of a company tenants behalf by the landlord owns the property, not the tenants has been! Molestie consequat, ultrices ac magna dapibus a molestie consequat, ultrices ac magna how to,. To 30 September 20X3, Q: ng the year What are some characteristics of an effective manager consequat! Dictum vitae odio from the funds received as a lease incentive generally refers to payments. Discounts for Inman events and more day for a five-day workweek, ending on Friday a five-day,! ( ) business transactions in a chronological order 25977, Houston, TX 77043, USA tenant a! Hardly say you had no opportunity to prevent them 1,20 ( ) 88.gracie, made! Day for a specified period of time, USA York, NY, 10123 What are some characteristics of effective... Adjusting and deferred Revenue has never been recorded and needs adjusting and Revenue... In advance for a five-day workweek, ending on Friday include an explanation ) assuming that the accounting for improvement... Of prepaid rent is $ 700 the company have taken, Q: ng year!