Question

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. c. 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. 9. The Warsaw Corporation began business operations on December 1, Year One. The company had the following transactions during the time when it was starting: a. An employee was hired on December 1, for $4,000 per month with the first payment to be made on January 1. b. The company made an $18,000 payment on December 1, to rent a building for the following six months. c. Supplies were bought on account for $10,000 on December 1. Supplies are counted at the end of the year and $3,600 is still on hand. d. The company receives $9,000 for a service that it had expected to provide immediately. However, a problem arises because of a series of delays and the parties agree that the service will be performed on January 9 e. A job was completed near the end of the year, and the customer will pay Warsaw all $8,000 early in the following year. Because of the late date, no entry was made at that time.

Answer 1

Journal Entries

		DATE	PARTICULARS				Debit Amount	Credit Amount
							( in $)	( in $)
8(a)		01-09-20XX	Rent A/C		Dr		60,000
			To bank A/C					60,000
8(b)		01-09-20XX	Bank A/C		Dr		60,000
			To RentA/C					60,000
8(c)		31-12-20XX	Prepaid Expenses A/C		Dr		20,000
			To rent paid A/C					20,000
8(d)		31-12-20XX	Rent received A/C		Dr		20,000
			To Advances A/C					20,000