1. Accounts Payable has an invoice to enter in February 2013 from Computer Consu

Question

1.       Accounts Payable has an invoice to enter in February 2013 from Computer Consulting International for support services from October 2012 to September 2013 for $12,000. How should this be coded?  Use the account names below to record the invoice.  Explain your rationale and any other relevant information.

2.       There are two inter-company partners companies that buy/sell inventory products to each other to be used in the manufacturing process.  If company A is showing a receivable for $1,000, what should company B record?  Use the account names to prepare the journal entry and explain why.

3.       At the end of July the Pre-paid Rent account had a GL Balance of $35,000. The reconciliation contained the following information:

                Building #1 – July Rent $10,000

                        Building #2 – August Rent $15,000

                        Building #1 –August Rent $10,000

·          What transactions would you expect to see in this account in August?

·          What would you expect the ending balance at August 31st to be in this account? (assuming that all of the leases are continuing)

Explanation / Answer

1. Services expense($12000*3/12) Dr.$3000

   To Computer Consulting international $3000

   (From Service expense form October2013 to December 2013 that is 3 months)

Prepaid Expense ($12000* 9/12) Dr. $9000

To Computer Consulting international $9000

(From advance payment from February 2013 to September 2013 that is 9 months)

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