The landlord waived the first month's rent in December 2023, but asked the rent for January and February 2024 totalling $13,000 to be paid in advance. Speedy Limited paid the $13,000 in cash to the landlord and recorded it as a prepayment. what is debit ? and what is credit ? how to journal?
Question
The landlord waived the first month's rent in December 2023, but asked the rent for January and February 2024 totalling 13,000 in cash to the landlord and recorded it as a prepayment. what is debit ? and what is credit ? how to journal?
Solution
In accounting, a debit entry is made to increase the balance of an asset account, while a credit entry is made to increase the balance of a liability or equity account.
In this case, Speedy Limited is making a prepayment of rent, which is an asset. Therefore, the company would debit the Prepaid Rent account to increase its balance.
On the other hand, the company is using its cash to make this prepayment. Cash is also an asset, and when it decreases, a credit entry is made. Therefore, the company would credit the Cash account.
The journal entry would look like this:
Debit: Prepaid Rent 13,000
This entry indicates that the company's Prepaid Rent asset has increased by $13,000, while its Cash asset has decreased by the same amount.
Similar Questions
The landlord waived the first month's rent in December 2023, but asked the rent for January and February 2024 totalling $13,000 to be paid in advance. Speedy Limited paid the $13,000 in cash to the landlord and recorded it as a prepayment.
6. A client named Pauline Windsor paid a $4,300 deposit to Speedy Limited for future work scheduled for January 2024. Speedy Limited recorded this deposit as a liability. what is debit? what is credit?
The adjusting entry to record the amount of prepaid rent used during the period requires a (debit/credit) to rent expense and a (debit/credit) to prepaid rent.
Explain what is prepaid rent expense, unearned revenue, accrued revenue and accrued expense and whether they're debit or credit on the general journal
2. Speedy Limited secured a $48,000 business loan and this money was deposited into the company's bank account. what is debit and what is credit? how to journal?
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.