Question

Required information [The following information applies to the questions displayed below.) On November 1, 2019, Wenger Co. paid its landlord $3,600 in cash as an advance rent payment on its store location. The six-month lease period ends on April 30, 2020, at which time the contract may be renewed. Required: a-1. Prepare the horizontal model to record the six-month advance rent payment on November 1, 2019. (Use amounts with + for increases and amounts with - for decreases.) Assets Balance Sheet Liabilities Stockholders' Equity

Answer 1

A1.

Balance sheet		Income statement
Assets	=	Liabilities	+	Stockholders equity		Net income	=	Revenue	-	Expenses
Prepaid rent	$3,600
Cash	($3,600)

a2. Journal entry

Prepaid rent	$3,600
Cash		$3,600

b2. Adjusting entry

Rent expense	$600
Prepaid rent ($3,600/6)		$600

C. Amount paid =$3,600

Less: Two months rent paid =$1,200

Balance amount =$2,400