Question

please provide information about which accohnt increases/decreases and the initial journal entries for each of these transactions

8. Keating Inc. rents its headquarters from Starling Enterprises for $10,000 per month. On September 1, 20XX, Keating pays Starling $60,000 for six months worth of rent. a. Record the entry that Keating Inc. would make on September 1, when the payment is made to Starling. b. Record the entry that Starling Enterprises would make on September 1, when they receive the rent payment from Keating, Record the adjusting entry that Keating should make on December 31, when the company begins to prepare its annual financial statements. d. Record the adjusting entry that Starling should make on December 31, when the company begins to prepare its annual financial statements.

Answer 1

Answer:-

	DATE	PARTICULARS		Debit Amount	Credit Amount
				( in $)	( in $)
8(a)	01-09-20XX	Prepaid Rent A/C	Dr	60,000
		To cash A/C			60,000
		(Being payment of 6 month rent in advance)
8(b)	01-09-20XX	Cash A/C	Dr	60,000
		To Unearned Rent Revenue A/C			60,000
		(Being 6 month rent received in advance)
8(c)	31-12-20XX	Rent Expenses A/C(60,000/6 *4)	Dr	40,000
		To Prepaid paid A/C			40,000
		(Being adjustment entry passed in the books of Keeting Inc)
8(d)	31-12-20XX	Unearned rent revenue A/C(60000/6 *4)	Dr	40,000
		To Rent Revenue A/C			40,000
		(being adjustment entry passed in the books of Starling Enterprises)