The trial balance of Pacilio Security Services Inc. as of January 1, 2017, had t
ID: 2557453 • Letter: T
Question
The trial balance of Pacilio Security Services Inc. as of January 1, 2017, had the following normal balances: Cash $78,972 Petty Cash 100 Accounts Receivable 33,440 Supplies 160 Prepaid Rent 3,200 Merchandise Inventory (23@ $280) 6,440 4,000 Land 250 Accounts Payable 1,400 Salaries Payable Common Stock 50,000 74,662 Retained Earnings During 2017 Pacilio Security Services experienced the following transactions: 1. Paid the salaries payable from 2016. 2. Paid $4,800 on March 1, 2017, for one year's lease in advance on the company van. 3. Paid $8,400 on May 2, 2017, for one year's office rent in advance, i 4. Purchased $550 of supplies on account. 5. Paid cash to purchase 105 alarm systems at a cost of $285 each.Explanation / Answer
Event 2.
On March 1, 2017, $4,800 was paid for one year lease in advance on the company van. From March 1 to December 31, 2017, ten months have passed. Therefore, 10 months' rent has been expired.
Amount of rent expired = $4,800 x 10/12 = $4,000
The journal entry to record the expired rent should be prepared as follows:
Event 3.
On May 2, 2017, $8,400 was paid for one year's office rent in advance. From May 2 to December 31, 2017, eight months have passed. Therefore, 8 months' rent has been expired.
Amount of rent expired = $8,400 x 8/12 = $5,600
The journal entry to record the expired rent should be prepared as follows:
Date Account Titles and Explanation Debit Credit Dec. 31 Rent expense 4,000 Prepaid rent 4,000Related Questions
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