Question 6BE

Question

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 $2,400 received in advance. Prepare LaBouche’s November 1 journal entry and the December 31 annual adjusting entry.

Step-by-Step Solution

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Answer

The amount of rent revenue is $1,600.

1Meaning of the Journal Entry

A journal entry is a method used to record all financial transactions made by the company in its journal. Journal entry means a record of business events in an accounting system.

2Journal Entries:

Journal Entries
Date	Accounts Titles and Explanations	Debit	Credit
Nov. 1	Cash	$ 2,400
	Unearned Rent Revenue		$2,400
Dec.31	Unearned Rent Revenue	$ 1,600
	Rent Revenue		$1,600

Working notes:

Unearned rent revenue = $ 2,400 (Given)

Rent revenue = ($ 2,400 × 2/3) = $1,600

Question 5BE

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