The following two events occurred for Trey Co. on October 31, 2017, the end of its fiscal year. Trey rents a building from its owner for $2,800 per month. By a prearrangement, the company delayed paying October's rent until November 5. On this date, the company paid the rent for both October and November. Trey rents space in a building it owns to a tenant for $850 per month. By prearrangement, the tenant delayed paying the October rent until November 8. On this date, the tenant paid the rent for both October and November. Required:1. Prepare adjusting entries that the company must record for these events as of October 31.

Question

Thomas Boyer

Business

20 April, 06:36

The following two events occurred for Trey Co. on October 31, 2017, the end of its fiscal year. Trey rents a building from its owner for $2,800 per month. By a prearrangement, the company delayed paying October's rent until November 5. On this date, the company paid the rent for both October and November. Trey rents space in a building it owns to a tenant for $850 per month. By prearrangement, the tenant delayed paying the October rent until November 8. On this date, the tenant paid the rent for both October and November. Required:1. Prepare adjusting entries that the company must record for these events as of October 31.

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Maverick Gamble · Answer 1

The adjusting entries are shown below:

1. Rent expense A/c Dr $2,800

To Rent payable $2,800

(Being rent is adjusted)

2. Accrued rent A/c Dr $850

To Rent revenue A/c $850

(Being rent income is recorded)

Since we have to pass the adjusting entries so we debited the expenses account and credited the liability side in the first entry, whereas in the second entry we debited again the expenses account and credited the income account.