Question

In its ongoing efforts to make the student life easier, Large Mart is currently attempting to develop a “study pillow” which will allow students to upload study material into their brain whilst sleeping. However, Large Mart has recently discovered that an American company called Bpple already holds a patent for this type of device. As a result, Large Mart has given up on its development attempts and decided to sell the Bpple product, which is called iSLEEP.

In order to sell the iSLEEP, Large Mart has rented a second store in Armidale. Large Mart signs a one year renting contract on 1st May 201x. The rent for the store will be $250 per month, and the renting contract requires Large Mart to prepay all of the rent for the year on 1st May 201x,

Question 1) Provide all journal entries that are necessary in the books of Large Mart to account for the signing of the renting contract, the payment of rent for the year, and the incurrence of rent for the months of May and June, AND provide a detailed explanation of your journal entries.

Answer 1