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Home > Business & Careers > Accounting   »   Journal Entry

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Old Apr 16, 2007, 06:08 AM
crazyitalian143
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Journal Entry
on 12/31 the company signs a lease for new office space , and pays for the first three months rent (Jan-Mar) The amount is 4500.

Do I do a journal entry for that

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Old Apr 16, 2007, 06:24 AM   #2  
goldenbutterfly
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yes, you should since you have paid for something.
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Old Apr 16, 2007, 06:29 AM   #3  
crazyitalian143
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so it would be

Cr Cash 4500
Dr Lease/note payable 4500

or bc he pays for the year

Dr New Office 13500
Cr Cash 4500
cr note payable 9000
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Old Apr 16, 2007, 12:09 PM   #4  
CaptainForest
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The fact he signs the lease requires no JE.

The only JE would be the cash paid upfront, that is 3 months worth, a total of $4,500

Dr. Prepaid Rent 4,500
Cr. Cash 4,500

Then, after January, you will Debit Rent Expense for 1/3 of that amount and draw down your Prepaid Rent by the same amount.
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