1.gillian \'s gandemin signed a lease on july 1st and paid $240,000 in cash. The

Question

1.gillian 's gandemin signed a lease on july 1st and paid $240,000 in cash. The term of lease is 2 years beginning on July 1st Prepare the appropriate journal entries for July 1st and 31st 2 june's jellies purchased supplies for $10,000 cash on June 1st 4,000 work of supplies remained at june's jellies on June 30h Prepare the appropriate journal entries for June 1st and June 30th. 3 cana's cake received a cash advance of $50,000 from rose's restaurants for baking services to be provided in the future. The cash advance was received on April 1st during April cara's provide $30,000 work of services to rose restaurants during April. Prepare the appropriate journal entries for April 1st and 30th, allie;s advertising employees earned $40,000 in September. These wage will be paid with the first payroll in October. Prepare the appropriate journal entry for September 30th

Explanation / Answer

lease is of two types:

1.Finance lease

2.Operating lease.

In case of finance lease all the risks and rewards incidental to ownership will be transfered.

Other than finance lease is operating lease.

In the given question no information was given about asset and rate of interest for which risks and rewards incidential to ownership will be transfered, so it is an operating lease.

In the case of operating lease lease payments will be recognised as expense by lessee and as income by lessor.

No journal entry is required at the time of signing a lease as there is no asset or cash payment is involved.

Journal entry at the time of making lease payment as on july 31st:

lease rent a/c Dr $240,000

To Cash a/c 240,000

2.Journal entries as on june 1 and june 30:

.Purchases a/c Dr $10,000

To cash a/c $10,000

Closing stock a/c Dr $4000

To Trading a/c $4000

3.Journal entries as on April 1 and April 30:

1.Cash a/c Dr $50,000

Customer/cash advance a/c $50,000

As cash is received cash is to be debited and advance received is a liability if no service is provided Cana's cake has to pay back.

2.Later after providing service, the service will be invoiced to rose's restaurants by creating an accounts receivable and this balance will be cleared by the cash advance received.

Journal entry to invoice the customer:

Accounts receivale a/c Dr $30000

To Revenue/service a/c $30,000

customer/cash advance a/c Dr $30,000

To Accounts receivable a/c $30,000

4.Journal entry as on september30:

Wages a/c Dr $ 40,000

To Wages payable a/c $40,000

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