Assume that on February 1, Brown and Smith paid $723,600 in advance for 2 years\
ID: 2386852 • Letter: A
Question
Assume that on February 1, Brown and Smith paid $723,600 in advance for 2 years' insurance coverage. Prepare Brown and Smith February 1 journal entry and the annual adjusting entry on June 30
Correct?
Debit- Cash 723600
Credit- Unearned Rev. 723600
Debit- Rent Rev. 150750
Credit- Unearned Rev. 150750
LaBouche Corporation owns a warehouse. On November 1, it rented storage space to a lessee (tenant) for 3 months for a total cash payment of $2,838 received in advance. Prepare LaBouche's November 1 journal entry and the December 31 annual adjusting entry. (Round answers to zero decimal places, e.g. 3,510.)
Correct?
Debit- Cash 2838
Credit- Unearned Rev. 2838
Debit- Rent Rev. 1892
Credit- Unearned Rev. 1892
When a corporation pays a note payable and interest,
the account Notes Payable will be increased.
the account Cash will be debited.
the account Interest Expense will be decreased.
the accounts Notes Payable and Interest Expense will be debited.
Correct?
the account Notes Payable will be increased.
Explanation / Answer
Sorry Nhi i didnt see the second part of your question. Your first adjusting entry is correct as you debit cash since you receive it and credit unearned revenue. The December 31st entry however you would need to debit unearned revenue to show that you have earned the two months of revenue since receiving that money. Debit - Unearned Rev. 1892 Credit - Rent Reveue 1892 Crediting rent revenue shows that you have earned the revenue. Notes payable is a liability account. Paying it off means that you owe less of that money. So Notes Payable decreases. Cash would be gone meaning it would be Credited. Interest Expense would increase since you have to pay more of it. The last part of it is correct