Central Shopping Ltd. rented a small store to Joseph’s Bakery Ltd. on September 1 for a year at a rate of $1,200 per month. The first and last month’s rent were payable in advance on September 1.

(a) For Central Shopping, prepare the journal entry to record receipt of the rent on September 1 and the adjusting entry required on September 30, assuming adjusting entries are prepared monthly.

(b) For Joseph’s Bakery, prepare the journal entry to record payment of the rent on September 1 and the adjusting entry required on September 30, assuming adjusting entries are prepared monthly.

Expert Solution

Part a.
Central Shopping:
Date	General Journal	Debit	Credit
September 1	Cash	2400
	Unearned Rent revenue		2400

September 30	Unearned Rent revenue	1200
	Rent revenue		1200

Part b.
Joseph’s Bakery:
Date	General Journal	Debit	Credit
September 1	Prepaid Rent	2400
	Cash		2400

September 30	Rent expense	1200
	Prepaid Rent		1200

Umair answered 1 year ago

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Central Shopping Ltd. rented a small store to Joseph’s Bakery Ltd. on September 1 for a year at a rate of $1,200 per month. The first and last month’s rent were payable in advance on September 1.

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