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  • Apr 16, 2007, 07:08 AM
    crazyitalian143
    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
  • Apr 16, 2007, 07:24 AM
    goldenbutterfly
    Yes, you should since you have paid for something.
  • Apr 16, 2007, 07:29 AM
    crazyitalian143
    So it would be

    Cr Cash 4500
    Dr Lease/note payable 4500

    Or because he pays for the year

    Dr New Office 13500
    Cr Cash 4500
    Cr note payable 9000
  • Apr 16, 2007, 01:09 PM
    CaptainForest
    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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