Question

Required information The following information appes to the questions displayed below On November 1, 2019, Wenger Co, padits landlord $3.00 in cash as an advance rent payment on its store location. The sik-month lease period ends on April 30, 2020, which time the contract may be renewed. Required: -1. Prepare the horizontal model to record the six month advanceret payment on November 1, 2019 (Use amounts with for increases and amounts with for decreases) • Stockholders'Equity Net Income

im sorry. this should be the first part of the question

Answer 1

Answer :-

a-1) horizontal model to record six months advance rent payment -

Balance sheet

Income statement

Assets

=

Liabilities

+

Stockholders Equity

Net Income

=

Revenue

-

Expenses

Prepaid Rent

$3,840

Cash

($3,840)

Prepaid rent or any Prepaid Expense are come under current assets in balance sheet.So if rent are paid in advance then Asset increase and cash reduce so there is no change in other things.

a-2)Journal entries to record the six month advance rent payment :

Date	General Journal	Debit	Credit
Nov 1,2019	Prepaid rent A/c. Dr.	$3,840
	To Cash A/c		$3,840
	(To record the six month advance rent payment)

b-2)Adjusting entry that will be made at the end of every month :

Event	General Journal	Debit	Credit
1	Rent Expense A/c Dr.	$640
	To Prepaid Rent A/c( $3,840/6)		$640
	(To record the entry that made at the end of every month)

c)Amount paid $3,840
(-)Two months rent used -$1,280

($640 × 2)

Balance at December 31, 2019 - $2,560

Answer of First part of the question :-

a-1) horizontal model to record payment of one-year insurance premium -

Balance sheet

Income statement

Assets

=

Liabilities

+

Stockholders Equity

Net Income

=

Revenue

-

Expenses

Prepaid Insurance

$3,240

Cash

($3,240)

Prepaid Insurance or any Prepaid Expense are come under current assets in balance sheet.So if Insurance are paid in advance then Asset increase and cash reduce so there is no change in other things.

Journal entries to record the one year insurance payment -

Date	General Journal	Debit	Credit
March 1,2019	Prepaid Insurance A/c. Dr.	$3,240
	To Cash A/c		$3,240
	(To record payment of one-year insurance premium)