Accrual Based Accounting Adjusting Journal Entries (AJEs): Say Something, Inc. rents equipment for...
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Accrual Based Accounting Adjusting Journal Entries (AJEs): Say Something, Inc. rents equipment for the 12 months, paying $14,400 cash in advance on August 1st, 2019 for the rental period of August 1st, 2019 July 31, 2020.
Record the journal entry for the original payment in advance on August 1st, 2019.
Record the adjusting entry to recognize Rent Expense on December 31st, 2019. Assume Say Something uses an annual accounting period which ends on December 31st, 2019 and adjusting entries are only made at the end of the annual accounting period on 12/31 (i.e. assume no adjusting entries have been recorded yet).
What if we did not make the adjusting entry on 12/31/19 to recognize this expense? Indicate by how much assets, liabilities, and SHE would be either under- or overstated if this adjusting entry were not recorded. If no effect, write no effect.
Assuming we do recognize this expense at the end of the accounting period on 12/31/19, what will the ending balance of the Prepaid Rent account be on December 31, 2019 (Assume the balance of Prepaid Rent on July 31st, 2019 was $0 and Say Something, Inc. has no other prepaid assets)?
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