gracie inc made a prepaid rent payment

Fu, Explore over 16 million step-by-step answers from our library, View answer & additonal benefits from the subscription, Explore recently answered questions from the same subject, Explore documents and answered questions from similar courses, University of Maryland, University College, Explore recently asked questions from the same subject. Q:The balance in the prepaid rent account before adjustment at the end of the year is $11,400, which, A:Prepaid rent is the rent which is paid in advance. adjusting entry on December 31, which is a Wednesday, is a debit to Wages Expense, $1,800, A company receives $6,500 for two season tickets sold on September 1 following income, method. no bias. Ocular Realty Co. pays weekly salaries of 16,600 on Friday for a five-day workweek ending on that day. The company's monthly rent is $700. liabilities and owner's equity will be understated for the period. Overview of Prepaid Rent Accounting. Lets assume we have the same facts as above, but now at the beginning of Year 7, the company decides to renew the lease for an additional 4 years. Calculation of Balance of Unearned Rent account on December 31 What adjusting entry would Morton Company make at the end of July to bring the vacation benefits payable account up to date? A. $1,400 ANSWER: aDIFFICULTY: Moderate 92. Therefore, the credit to Supplies in the adjusting entry is for theamount of supplies, The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n). Assets understated by $600; net income overstated by $600. Thank you for subscribing to Morning Headlines. Hence, correct option is (b), A:Adjustment entry is the entry made for accounting period to record the amount of right amount of, Q:The unused basement space of Magadjust Tayo Store is rented to Compute Kamuna Shop for P2,500 per, A:In the question, c. $2,800. If so please contact customer support at (510) 658-9252, Password Reset Instructions have been sent to. Accounting for tenant improvement allowances when a lease renews. Don't miss the premier event for real estate pros. Complete the following sentence. by Janet Portman. Lorem ipsum dolor sit amet, consectetur adipiscing elit. But legal niceties aside, the landlord will still have access to a sizable sum. Are Filipino Values mostly Duty-Based Or Consequentialist? The company's monthly rent is $800. As discussed above, a tenant improvement allowance is recorded as a liability which is amortized (as a reduction to rent expense) over the life of the lease. Gracie company made a prepaid Rent payment of $2,800 on January 1. By describing the money as held "in trust," the law makes the landlord a custodian of the tenants money, with authority to use it only for rent as rent comes due. It must explain that the tenant has 14 days in which to either a) pay the rent due or b) move out of the rental unit. Rent paid on 1 October 20X2 for the year to 30 September 20X3, Q:ng the year. Legislators in New Jersey have figured this out, and have proposed amending their security deposit law, which caps the deposit at one-and-one-half times the monthly rent (AB 3236). Why landlords frown upon prepaid rent. The Journal Entry to recorded prepaid rent was as follow: The Journal Entry to recorded accrued rent expense for the month January was as follow: Amount of prepaid rent = $2,800 - $700 = $2,100, This site is using cookies under cookie policy . Pellentesque dapibus efficitur laoreet. C. Liabilities overstated by $600; net income understated by $600. Mann Publications. New York has a statewide grace period of five days. There is actually quite a bit of confusion regarding what the law says on this matter. This problem has been solved! Walter W. A: Your landlords hesitations are understandable, particularly if your state, like most, limits the amount of security deposit a landlord may require. Lorem ipsum dolor sit amet, consectetur, dictum vitae odio. Is there any reason why I shouldnt be able to prepay the rent? The. Prepaid Rent is the payment of rent in advance for a specified period of time. (Granted, this doesnt amount to an agreement to pay for them, but it undercuts your side of the fairness argument a bit.) B. The new legislation increased protections for tenants across the state, particularly those living in apartments that werent already subject to rent control laws. -variance The observation that the preference for, I need the answers and explanation in number 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17,18,19,20,21,22,23,24,25,26,27,28,29,30 1. Nam lacinia pulvinar tortor nec facilisis. All the expenses that are paid in, Q:A business pays weekly salaries of $11,420 on Monday for the preceding five-day week ending on, A:Journal entries record the transactions of the business in its accounting books. nine And the landlord will want to approve any changes that modify the property rather than simply beautifying it temporarily for the tenants enjoyment. 2. Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations, Reporting of cash flows means a statement of cash flow which is a financial statement. On February 1, WorldTravel Ltd. prepaid $ 6,200 for three months' rent. Argue for your, "The Church is other directed rather than self-focused." Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends (a) on Wednesday and (b) on Thursday. Each and, Q:The balance in the prepaid rent account before adjustment at the end of the year is $11,940, which, A:Entry will be: In order to understand the correct accounting, we have included an example below. The amount of prepaid Rent that would appear on the January 31 balance sheet after adjustment is ? The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is Sales salaries are uniformly 11,750 for a five-day workweek, ending on Friday. because the tenants ignored the fixture rule and went ahead without getting your approval. Below is the TIA amortization schedule for the renewed lease: The journal entry to record the amortization of the TIA each period after the renewal is as follows: Notice that the net rent expense for the initial lease was $1,400 for years 1 6, while the net rent expense for the renewed lease is $3,200 ($3,250 minus $50). 450 Fashion Ave, Suite 2306 document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); MANN PUBLICATIONS Rent period = 12 Months If a rental payment is more than five days late, a landlord may charge $50 or 5% of the monthly rent, whichever is less.3 However, landlords can only charge a late fee if its also included in the signed lease agreement. Recording of a business transactions in a chronological order. So, this law extends similar benefits to renters living in unregulated apartments throughout New York. + a. Tenants should keep this in mind when prepaying for many months rent: Its one thing to walk away from a modest deposit, but its another thing entirely to forgo many thousands of dollars. Your email address will not be published. James M. Wahlen, Jefferson P. Jones, Donald Pagach, Carl Warren, James M. Reeve, Jonathan Duchac, Gracie company made a prepaid Rent payment of $2,800 on January 1. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. During May, employees earned an additional 2,790 in vacation benefits, but some employees used vacation days that amounted to 2,050 of the vacation benefits. But it also prevents large-scale mischief at the other end of the landlord-tenant relationship. Recall that at the end of Year 6, the company decides to renew the lease for an additional 4 years, and the payments are now $3,000 in years 7-10 and $4,000 in years 11-14. Divide this value by the remaining 8 year lease term to come up with a period straight-line rent expense of $3,250. The amount of prepaid Rent that would appear on the January 31 balance sheet after adjustment is ? In other words, despite what tenants might think or consider fair, once that faucet is installed, it no longer belongs to the tenant unless the landlord agrees. The guidance under US GAAP includes the current FASB standard, ASC 840, as well as the new standard, ASC 842. It should contain: Even if a tenant pays via check, they can still request (in writing) that the landlord provide receipts for their rent payments. You will receive additional instructions via email. A common error is to continue amortizing the TIA over the initial lease term without adjusting the amortization period to reflect the updated lease term. If a landlord fails to provide written notice, the tenant may continue to occupy the apartment under the existing lease from the date the landlord does give notice until the date the notice period expires. There seems to be a problem with your Inman Select Membership. Its also illegal for landlords to charge a fee if a tenant chooses to pay rent using another method, such as cash, check, or money order.1. The 2,050 was charged to Wages Expense when it was paid in May. Wages has been accrued for 7 days. The company's monthly rent is $700. The company's monthly rent is $700 . Vague legislation such as this will surely lead to litigation. 15 stories covering tech, special reports, video and opinion. May 18, 2011. If youre lucky, the judge will decide that the tenants were simply officious benefactors: people whose actions benefited others, but without the recipients desire or agreement. Nam lacinia pulvinar tortor nec facilisis. When the deposit is limited in size, the damage done by these unscrupulous landlords is at least lessened. 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A rent of 4 months has been paid in advance on January 1 at the rate of $700 per month. Like many other states, New York protects a tenants right to: New York shields tenants from landlord retaliation for a longer period than many other states. It is prepared at the end of every financial cycle. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is 6. If a landlord hasnt received a rent payment within five days of the due date, they have to send the tenant a letter by certified mail informing them of that fact. The company's monthly rent is $1,000. Q:Adjustment forAccrued Expense All too frequently, landlords unjustifiably keep all or a portion of a tenants deposit, and many tenants dont fight to get them back. The company's monthly rent is $700. The 2,490 was charged to Wages Expense when it was paid in July. Be sure to define reliability coefficient in your answer before explaining how the two factors affect reliability, A split-half correlation, KR 20, and coefficient alpha are all used to evaluate -validity. The whole picture involves whats right and whats fair, not just what the legal rule says. Gracie, Inc. made a prepaid rent payment of $4,000 on January 1. But tenants interests are at stake, too, because these structural changes become the property of the landlord unless the owner agrees otherwise. The company's monthly rent is $800. First step in, Q:Rent paid on 1 October 20X2 for the year to 30 September 20X3 was $1,200, and rent paid on 1 October, A:We have the following information: Review Of A Company's Accounting System. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. This is a common mistake, as incentives received should not be netted against leasehold improvements. The last payday of the year was Friday, December 26. How youll fare will depend on how the judge weighs these factors. Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. Thats not necessarily so. Resources But we dont actually know because its not codified. Rent it Right. For a full explanation of tenant improvements and lease incentives under ASC 842, click here. An example of deferred revenue is Unearned Rent. $2,100 B. $2,100 b. The company's monthly rent is $700. Tenant improvement allowances are a type of lease incentive, which are recognized by the lessee as a reduction to rental expense (or a reduction to rental revenue by the lessor) on a straight-line basis over the term of the lease. = Nam lacinia pulvinar tortor nec, rem ipsum dolor sit amet, consectetur adipiscing elit. A potential workaround is a situation in which a property owner takes one years prepaid rent and places it into an escrow or a bank account that acts as a third party and pays the owner monthly. Accruals are needed when an unrecorded expense has been incurred or an unrecorded, The difference between deferred revenue and accrued revenue is that accrued revenue has. Plus, state laws are more clear about grace periods and fees for late rent. In many states, any money collected up front (other than the first months rent) is legally considered a returnable deposit. True b. . A balance sheet is one of the , Financial statements are written records of an organization which provide a true and real picture of business activities. Required fields are marked *, Please complete the equation below: * The balance in the unearned rent account for Jones Co. as of December 31 is $1 ,20(). Theamount of prepaid rent that would appear on the January 31 balance sheet after adjustment is a. User promo code onward25 during checkout to save 25% on your Inman Select Membership. Tenants would prefer to prepay rent and sometimes become upset when an owner cant accept such payments. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry Is O A $18,000 OB. 212-840-6266. New York, NY, 10123 Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. Which of the following statement/s is or are true? Knowing this rule, tenants would want to know, before doing the work, that they have either the right to reinstall the old fixture when they leave or the right to be reimbursed for the new one. Accumulated Depreciation and Depreciation Expense are classified, respectively, as a. expense, contra asset A double-entry bookkeeping system Normal account balances are those which are expect. Everything in. Donec aliquet. You may be asked for personal information to verify your identity. Gracie, Inc. made a prepaid rent payment of $2,900 on January Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions. This is the expense paid by a company in advance and would be treated as asset until, Q:The balance in the prepaid rent account before adjustment at the end of the year is $12,840, which, A:Prepaid rent = $ 12840 Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more. The lease term is 10 years, so we take the total value of the payments of $15,000 divided by 10 years to get a straight-line expense of $1,500 to be recognized annually. What should we do? Your email address will not be published. $700 C. $1,400 D. $2,80 Question Gracie company made a prepaid Rent payment of $2,800 on January 1. Therefore, the lessee needs to subtract the $1,000 tenant improvement allowance received from the landlord from the total required cash payments of $15,000, resulting in $14,000 of total consideration and an annual straight-line expense of $1,400 ($14,000 / 10 years). Prepaid expenses have a. not yet been recorded as expenses but have been paid b. been recorded as expenses and paid c. been incurred and paid d. not yet been recorded as expenses D Deferred revenue is revenue that is a. earned and the cash has been received b. earned but the cash has not been received 2003-2023 Chegg Inc. All rights reserved. The landlord, focusing on my unemployment, is concerned that we wont be able to pay the rent. if negotiated within the lease agreement. 100.Accrued revenues would appear on the balance sheet as, Our Experts can answer your tough homework and study questions. The equipment depreciates $296 per month. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is Accounting Business Financial Accounting ACCT 220-7985 Answer & Explanation Solved by verified expert A. As on Sep, Q:a. Forgot your username? Second, it sounds as though these improvements were just that: commonsense upgrades that perhaps you, too, would have done in time. Theamount of prepaid rent that would appear on the January 31 balance sheet after adjustment is, 93.Accumulated Depreciation and Depreciation Expense are classified, respectively, as, 94.The type of account and normal balance of Prepaid Insurance is, 95.The type of account and normal balance of Unearned Consulting Fees is, 96.Data for an adjusting entry described as "accrued wages, $2,020" requires a, a.debit to Wages Expense and a credit to Wages Payable, b.debit to Wages Payable and a credit to Wages Expense, c.debit to Accounts Receivable and a credit to Wages Expense, d.debit to Dividends and a credit to Wages Payable, 97.Supplies are recorded as assets when purchased. 88.Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. To illustrate the required journal entries and calculations for a TIA lets assume the following facts: Base Rent: $1,000 annual payment (in arrears) in years 1-5, and $2,000 annual payment (in arrears) in years 6-10, Incentive: $1,000 tenant improvement allowance for leasehold improvements, received from lessor at lease commencement. The amount of prepaid rent that would appear on the January 31 balance sheet after. The company's monthly rent is $700 . A rent of 4 months has been paid in advance on January 1 at the rate of $700 per month. The amount of prepaid rent that would appear on the January 31 balance sheet, ACCT.ACBSP.APC.15 Current Assets Reporting ACCT.AICPA.FN.03 Measurement, Accumulated Depreciation and Depreciation Expense are classified, respectively, as, ACCT.AICPA.FN.03 Measurement BUSPROG: Analytic, The type of account and normal balance of Prepaid Insurance is, The type of account and normal balance of Unearned Consulting Fees is, Data for an adjusting entry described as accrued wages, $2,020 requires a, debit to Wages Expense and a credit to Wages Payable, debit to Wages Payable and a credit to Wages Expense, debit to Accounts Receivable and a credit to Wages Expense, debit to Drawing and a credit to Wages Payable, Supplies are recorded as assets when purchased.

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