Question

The following two events occurred for Trey Co. on October 31, 2017, the end of its fiscal year.

1. Trey rents a building from its owner for $2,700 per month. By a prearrangement, the company delayed paying October's rent until November 5. On this date, the company paid the rent for both October and November.
2. Trey rents space in a building it owns to a tenant for $950 per month. By prearrangement, the tenant delayed paying the October rent until November 8. On this date, the tenant paid the rent for both October and November.

  
Required:

1. Prepare adjusting entries that the company must record for these events as of October 31.

2. Assuming Trey does not use reversing entries, prepare journal entries to record Trey’s payment of rent on November 5 and the collection of the tenant’s rent on November 8.

3. Assuming that the company uses reversing entries, prepare reversing entries on November 1 and the journal entries to record Trey’s payment of rent on November 5 and the collection of the tenant’s rent on November 8.

Answer 1

Trey Co.
Journal entries
Date	Accounts	Debit	Credit	Calculation
	Req 1 - adjusting entries
31-Oct-17	Rent expense	$        2,700
	Accounts Payable		$        2,700
31-Oct-17	Rent Receivable	$           950
	Rent Revenue		$           950
	Req 2 - Assuming Trey does not use reversing entries
5-Nov-18	Accounts Payable	$        2,700		Oct rent
	Prepaid Rent	$        2,700		Nov rent - prepaid
	Cash		$        5,400
8-Nov-18	Cash	$        1,900
	Rent Receivable		$           950	Oct rent
	Unearned Rent Revenue		$           950	Nov rent - advance
	Req 2 - Assuming Trey does not use reversing entries
1-Nov-18	Accounts Payable	$        2,700
	Rent expense		$        2,700
1-Nov-18	Rent Revenue	$           950
	Rent Receivable		$           950
5-Nov-18	Rent expense	$        2,700		Oct rent
	Prepaid Rent	$        2,700		Nov rent - prepaid
	Cash		$        5,400
8-Nov-18	Cash	$        1,900
	Rent Revenue		$           950	Oct rent
	Unearned Rent Revenue		$           950	Nov rent - advance