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    crazyitalian143's Avatar
    crazyitalian143 Posts: 6, Reputation: 1
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    #1

    Apr 16, 2007, 07:08 AM
    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
    goldenbutterfly's Avatar
    goldenbutterfly Posts: 63, Reputation: 8
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    #2

    Apr 16, 2007, 07:24 AM
    Yes, you should since you have paid for something.
    crazyitalian143's Avatar
    crazyitalian143 Posts: 6, Reputation: 1
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    #3

    Apr 16, 2007, 07:29 AM
    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
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #4

    Apr 16, 2007, 01:09 PM
    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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