Question

There are three pages to this. I have first page done and stuck on last two! Thank you!

4-9. Prepayments 1. Ajax Corporation leased a building for one year on April 1 for $18,000. The company paid for the entire year on April 1. Ajax's bookkeeper made the following entry on April Cr. Rent expense Prepaid rent Dr. 1,500 16,500 Cash 18,000 Assume it is now December 31. Ajax has not made any adjusting entries before December 31. Required: a. Calculate the adjusted ending balance in the Prepaid Rent account and the Rent Expense account at December 31. ending balance - 19000(ar 150o) = 18000-13300 - 4500 Rent expence account 9x1500=(13, soos b. Prepare t-accounts showing the April 1 transaction, the adjustment to be made at December 31, and the ending balances in Prepaid Rent and Rent Expense. Prepaid Rent Rent Expense Credit 4/4/1 16,500 12000 12/31/4/1 1500 1331 12,000 13. soort 4500 c. Prepare the general journal adjusting entry for December 31. rent expense 12,000 Prepaid rent 12,000 18x1600)

Answer 1

1 . a)	Calculation of adjusted ending balance of Prepaid Rent and Rent Expense account at December 31.
		$
	Balance in Rent Expense	1500
	Add: Rent for the period from May till December ( $ 1,500 x 8)	12000
	Adjusted Ending balance of Rent Expense account (Dr)	13500
	Balance in Prepaid Rent	16500
	Less: Rent for the period from May till December ( $ 1,500 x 8)	-12000
	Adjusted Ending balance of Prepaid Rent account (Dr)	4500

1 . b)	Prepaid Rent
	Date	Transactions	Debit $	Transactions	Credit $
	1-Apr	Cash	16500
	31-Dec			Rent Expense	12000
	31-Dec			Ending Balance	4500
		TOTAL	16500	TOTAL	16500
	Rent Expense
	Date	Transactions	Debit $	Transactions	Credit $
	1-Apr	Cash	1500
	31-Dec	Prepaid Rent	12000
	31-Dec			Ending Balance	13500
		TOTAL	13500	TOTAL	13500

1 . c)	Adjusting journal entries
Date	Account's tittle	Debit $	Credit $
31-Dec	Rent Expense	12000
	Prepaid Rent		12000
	(to be record adjustments of rent from May to December)

2. a)	Calculation of adjusted ending balance of Prepaid Rent and Rent Expense account at December 31.
		$
	Balance in Rent Expense	18000
	Less: Rent for the period from January till March for the next year ( $ 1,500 x 3)	-4500
	Adjusted Ending balance of Rent Expense account (Dr)	13500
	Balance in Prepaid Rent	0
	Add: Rent for the period from January till March for the next year	4500
	Adjusted Ending balance of Prepaid Rent account (Dr)	4500

2 . b)	Prepaid Rent
	Date	Transactions	Debit $	Transactions	Credit $
	31-Dec	Rent Expense	4500
	31-Dec			Ending Balance	4500
		TOTAL	4500	TOTAL	4500
	Rent Expense
	Date	Transactions	Debit $	Transactions	Credit $
	1-Apr	Cash	18000
	31-Dec			Prepaid Rent	4500
	31-Dec			Ending Balance	13500
		TOTAL	18000	TOTAL	18000

2 . c)	Adjusting journal entries
Date	Account's tittle	Debit $	Credit $
31-Dec	Prepaid Rent	4500
	Rent Expense		4500
	(to be record adjustments of three month rent not yet due)

3. a)	Calculation of adjusted ending balance of Prepaid Rent and Rent Expense account at December 31.
		$
	Balance in Rent Expense	0
	Add: Rent for the period from April till December ( $ 1,500 x 9)	13500
	Adjusted Ending balance of Rent Expense account (Dr)	13500
	Balance in Prepaid Rent	18000
	Less: Rent for the period from April till December ( $ 1,500 x 9)	-13500
	Adjusted Ending balance of Prepaid Rent account (Dr)	4500

3 . b)	Prepaid Rent
	Date	Transactions	Debit $	Transactions	Credit $
	1-Apr	Cash	18000
	31-Dec			Rent Expense	13500
	31-Dec			Ending Balance	4500
		TOTAL	18000	TOTAL	18000
	Rent Expense
	Date	Transactions	Debit $	Transactions	Credit $
	31-Dec	Prepaid Rent	13500
	31-Dec			Ending Balance	13500
		TOTAL	13500	TOTAL	13500

3 . c)	Adjusting journal entries
Date	Account's tittle	Debit $	Credit $
31-Dec	Rent Expense	13500
	Prepaid Rent		13500
	(to be record adjustments of rent for the period from April till December)