Following are two recent transactions of Larson Realty: - Received $24,000 advan
ID: 2349612 • Letter: F
Question
Following are two recent transactions of Larson Realty:
- Received $24,000 advance payment for one year's rent on an office building being leased to an anccounting firm by Larson.
- Paid $6,000 in advance for six months of newpaper advertising.
a.) Prepare a general journal entry to record each of these transactions in Larson's accounting records.
b.) Prepare a general journal entry for each transaction from the point of view of the other party (company) to the transaction.
c.) Were Larson's total assets increased, decreased, or unchanged as a result of each of these transactions?
Explanation / Answer
a) Cash (Dr.) 24000 Unearned rent (Cr.) 24000 Prepaid advertising (Dr.) 6000 Cash (Cr.) 6000 b) Prepaid rent (Dr.) 24000 Cash (Cr.) 24000 Cash (Dr.) 6000 Unearned advertising fee (Cr.) 6000 C) Assets = Liabilities + Equity (+24000) = (+24000) + 0 (+6000-6000) = 0 + 0 Assets increased by 24000