Please show working Be Careful Company prepares monthly financial statements. Th

Question

Please show working Be Careful Company prepares monthly financial statements. The company rents a fax machine. The rental agreeent calls for a $350 lmp sum payment at the beginning of each month, plus an aditional $0.08 per fax, payable on the 10th of the following mosth. In November, 1,500 faxes were sent; in December, 1,400 fases were sent. What appeared on X Company's December 31 financial statements? S.AO Rent expense, $470; Rent Payable, $470 BO Rent expense, $350; Rent Payable, $350 CO Rent expense, $470; Rent Payable, $120 DO Rent expense, $462 Rent Payable, $462 Rent expense, $462; Rent Payable, S350 FO Rent expense, $462; Rent Payable, $112

Explanation / Answer

The fax done in December month is the expense of December Month, it is not relevant when we are making payment, a expense must be recorded when it happens.

So December Cost = Monthly Rent + (No. of fax * $0.08 per fax)

= 350 + (1400 fax * 0.08)

December Cost = $462

Rent Expense (Dr.) 462

Rent Payable (Cr.) 462

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