Jan 1. The salon rented a place that cost 12,000 annually to start the business. The...

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Jan 1. The salon rented a place that cost 12,000 annually to start the business. The...

Jan 1. The salon rented a place that cost 12,000 annually to start the business. The full payment due in Dec. 31, 2020.

How will be recording the transaction in Jan 31. ??

business accounting

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Answer 1

Answer #1

Since place is taken on rent on Jan. 1, 2020 therfore till 31st Jan one month has been expired so according to accrual concept the expense should be recorded in the period in which that related to. Therefore following journal entry will be passed on Jan. 31, 2020

Credit Debit 1,000 11,000 Date Account Title and Explanation Jan-31 Rent expense Prepaid Rent Rent Payable (Took a place on r

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