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42. The balance in the prepaid rent account before adjustment at the end of the year...

42. The balance in the prepaid rent account before adjustment at the end of the year is $12,804, which represents 12 months' rent paid on December 1. The adjusting entry required on December 31 is

43. If a fixed asset, such as a computer, were purchased on January 1st for $2,489.00 with an estimated life of 7 years and a salvage or residual value of $220.00, what is the journal entry for monthly expense under straight-line depreciation?

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Answer #1

42.

Rent expense for 12 months = $12,804

Rent expense for 1 month = 12,804 x 1/12

= $1,067

Date General journal Debit Credit
December 31 Rent expense $1,067
Prepaid rent $1,067
( To record rent expense)

43.

Annual depreciation expense = ( Cost of equipment- Residual value)/Estimated life

= (2,489-220)/7

= $324 ( Rounded off to whole number)

Monthly depreciation expense = Annual depreciation expense x 1/12

= 324 x 1/12

= $27

Date General journal Debit Credit
December 31 Depreciation expense $27
Accumulated depreciation- Computer equipment $27
(To record depreciation expense)
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