Essay about Accounting: Depreciation and Prepaid Rent

Submitted By uvbi08
Words: 618
Pages: 3
Open Document
Exercise 15-2:
January 1, 2011 Prepaid rent (advance payment) 96,000 Cash 96,000

Prepaid rent (annual rent payment) 80,000 Cash 80,000

Leasehold improvements 180,000 Cash 180,000

December 31, 2011 Rent expense (annual rent) 80,000 Prepaid rent 80,000

Rent expense (advance payment allocation) 32,000 Prepaid rent ($96,000 ÷ 3) 32,000 Depreciation expense ($180,000 ÷ 3 years) 60,000 Accumulated depreciation 60,000

Exercise 3 Financial Statement: January 1, 2011 Leased equipment (calculated above) 112,080 Lease payable (calculated above) 112,080

Lease payable 15,000 Cash (lease payment) 15,000

Exercise 3 April 1, 2011 Interest expense (2% x [$112,080 – 15,000]) 1,942
Lease payable (difference) 13,058 Cash (lease payment) 15,000 July 1, 2011 Interest expense (2% x $84,022: from schedule) 1,680
Lease payable (difference) 13,320 Cash (lease payment) 15,000 October 1, 2011 Interest expense (2% x $70,702: from schedule) 1,414
Lease payable (difference) 13,586 Cash (lease payment) 15,000 December 31, 2011 Interest expense (2% x $57,116: from schedule) 1,142 Interest payable 1,142

Depreciation expense ($112,080 ÷ 2 years) 56,040 Accumulated depreciation 56,040 January 1, 2012 Interest payable (from adjusting entry) 1,142
Lease payable (difference) 13,858 Cash (lease payment) 15,000

Exercise 7
Requirement 1 January 1, 2011 Leased assets 4,000,000 Lease payable 4,000,000
Requirement 2

$4,000,000 ÷ 3.16987** = $1,261,881 present lease value payment ** present value of an ordinary annuity of $1: n=4, i=10% Lease Amortization Schedule Lease Effective Decrease Outstanding Payments Interest in Balance Balance 10% x Outstanding Balance
-------------------------------------------------
4,000,000
-------------------------------------------------
2011 1,261,881 .10 (4,000,000) = 400,000 861,881 3,138,119
-------------------------------------------------
2012 1,261,881 .10 (3,138,119) = 313,812 948,069 2,190,050
-------------------------------------------------
2013 1,261,881 .10 (2,190,050) = 219,005 1,042,876 1,147,174
-------------------------------------------------
2014 1,261,881 .10 (1,147,174) = 114,707* 1,147,174 0
-------------------------------------------------
5,047,524 1,047,524 4,000,000
-------------------------------------------------
* adjusted for rounding of other numbers in the schedule

Requirement 3 December 31, 2011 Interest expense (10% x outstanding balance) 400,000
Lease payable (difference) 861,881 Cash (payment determined above)
Show More

Related Documents: Essay about Accounting: Depreciation and Prepaid Rent

Financial Accounting, Recognition And Measurements, And Accounting Cycle

CHAPTER 4 – ACCRUAL ACCOUNTING, ADJUSTING ENTRIES, AND ACCOUNTING CYCLE TRUDY NGUYEN I. Recognition & Measurement in Financial Statements 1) Recognition • The process of including an item in the financial statements. • Recognized with Words (Cash, Land), and Numbers (amount) 2) Measurement a. The Attribute to be Measured – recording the cost of the assets • Historical cost (verifiable) – the amount paid for an assets and used as a basis for recognizing…

Words 551 - Pages 3

Questions On Accounting

Linh D. Phan Exercise 1-5: 1 + E : Specific accounting principle - Usually created by a pronouncement an authoritative body. 2 + G: Going-concern assumption - Financial statements reflect the assumption that the business continues operating. 3 + A: General accounting principle - Derived from long-used and generally accepted accounting practices. 4 + C: Business entity assumption - Every business is accounted for separately from its owner or owners. 5 + D: Revenue recognition principle - Revenue…

Words 1087 - Pages 5

Issues in financial accounting Essay

14,250 8,500 39,000 38,800 b) The accrual basis of accounting provides a better picture of a company's financial position at a moment or point in time. The reason is that all assets that were earned are reported and all liabilities that were incurred will be reported. So because of matching Principle in Accounting it would be better to use Accrual basis. a)…

Words 400 - Pages 2

International Accounting Essay

(8) 2,000 | 3,300 | | Accounts Receivable | Balance 15,000 | | | (4) 13,000 | (6) 9,000 | | 11,000 | | Supplies | Balance 13,000 | | (2) 4,000 | | 17,000 | | Prepaid Rent | Balance 3,000 | | 3,000 | | Equipment | Balance 21,000 | | 21,000 | | Accounts Payable | | Balance 19,000 | | (2) 4,000 | (5) 15,000 | | | 8,000 | | |…

Words 1293 - Pages 6

Generally Accepted Accounting Principles and Trial Balance Essay

C. To record payment of an accrued expense. D. To record receipt of an accrued revenue. E. To record an accrued expense. F. To record an accrued revenue G. To record this period’s use of a prepaid expense. H. To record payment of a prepaid expense. I. To record this period’s depreciation expense. ______ 1. Interest Expense 600 Interest Payable 600 ______ 2. Interest Payable 600…

Words 1527 - Pages 7

Analysis Of Adjustment, And The Quality Of Earnings

companies and numbers ▪ Upgraded Team Project at end of EOC to follow concept of a continuous project from prior and subsequent chapters. ▪ New annual report cases CHAPTER SUMMARY An accounting system is designed to collect, process, and report financial information. During each period, an accounting information processing cycle starts with analyzing and recording transactions (data collection) and ends with the preparation of the required financial statements. It is also necessary for the…

Words 5777 - Pages 24

Generally Accepted Accounting Principles and Net Realizable Value Essay

Michael Thomas Week 2 Assignment ACC205: Principles of Accounting October 20, 2014 Week Two Exercise Assignment Revenue and Expenses 1. Recognition of concepts. Jim Armstrong operates a small company that books enter¬tainers for theaters, parties, conventions, and so forth. The company’s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre¬paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the…

Words 1618 - Pages 7

Notes On Intermediate Accounting

ACCT 4111 Intermediate Accounting I 04:33:29 AM 1 ACCT 4111, Sumer 2015 Dr. Taewoo Park Office : #522 Robinson College of Business (35 Broad Street) Phone : (404) 413-7219 E-mail : tpark11@gsu.edu Office Hour : Mondays and Wednesdays 02:30 - 03:30 PM, and by appointment 04:33:29 AM 2 COURSE DESCRIPTION REQUIRED MATERIAL Spiceland, Sepe and Nelson, Intermediate Accounting, 7th edition PREREQUISITE CLASS FORMAT 04:33:29 AM 3 GRADING Three exams 90 % Attendance and Quizzes 10 % Total…

Words 3581 - Pages 15

Questions On Accounting

ANSWERS TO QUESTIONS 29. The post-closing trial balance contains only balance sheet accounts. Its purpose is to prove the equality of the permanent account balances that are carried forward into the next accounting period. SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 4-12 | | Account | | | | | | | | (a)(b)(c)(d)(e)(f)(g) | | Accumulated DepreciationDepreciation ExpenseRetained EarningsDividendsService RevenueSuppliesAccounts Payable | | Balance SheetIncome StatementRetained…

Words 1710 - Pages 7

Bob's Chocolate and More Accounting Cycle Essay

The Accounting Cycle Bob’s Chocolate Chips and More, a bakery specializing in gourmet pizza and chocolate chip cookies, started business on October 1, 2011. The following transactions occurred during the month. 1. The company issued 6,000 shares of common stock at $15 per share. 2. The company acquired office equipment on October 1 for $30,000 cash. The equipment was used for administrative tasks. 3. The company purchased $15,000 of ingredients on account. 4. Rent is $500…

Words 1625 - Pages 7