Franklin Hardware, a franchise of Stellar Hardware Corporation, pays quarterly r

Question

Franklin Hardware, a franchise of Stellar Hardware Corporation, pays quarterly rent of $24,000 to Jackson Commercial Real Estate at the beginning of each quarter for its location in Jackson Mall. Requirement Using the balance-sheet-equation format, analyze the effects of the following on the tenant's and the landlord's financial position: 1. Franklin Hardware pays $24,000 rent on July 1 2. Adjustment for July 3. Adjustment for August. 4. Adjustment for September Enter the transactions into the equation one at a time, beginning with the July 1 payment on the books of Franklin Hardware first. (Enter decreases with a minus sign or parentheses and leave any unused cells blank.) Assets Liabilities + Stockholders' Equity Prepaid Unearned Rent Rent Cash Rent Revenue + Revenue - Expense Books of Franklin 1. July 1 payment 2. Adjustment for July 3. Adjustment for August 4. Adjustment for September Next, enter the transactions into the equation on the books of Jackson Commercial Real Estate, beginning with the July 1 payment. (Enter decreases with a minus sign or parentheses and leave any unused cells blank.) Rent Assets Liabilities+ Stockholders' Equity Prepaid Unearned Rent Rent Books of Jackson 1. July 1 payment 2. Adjustment for July 3. Adjustment for August 4. Adjustment for September Cash Rent Rent Revenue + Revenue - Expense

Explanation / Answer

Solution:

Books of Franklin Assets = Libilities + Stockholder's Equity Cash + Prepaid Rent = Unearned Rent Revenue + Rent Revenue - Rent Expense 1. July 1 Payment -$24,000.00 $24,000.00 2. Adjustment for July -$8,000.00 $8,000.00 3. Adjustment for August -$8,000.00 $8,000.00 4. Adjustment for September -$8,000.00 $8,000.00

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