On January 1, 2013, Sweetwater Furniture Company leased office space under a 21-

Question

On January 1, 2013, Sweetwater Furniture Company leased office space under a 21-year operating lease agreement. The contract calls for annual rent payments on December 31 of each year. The payments are $21,000 the first year and increase by $250 per year. Benefits expected from using the office space are expected to remain constant over the lease term.

Record Sweetwater's rent payment at December 31, 2017 (the fifth rent payment) and December 31, 2027 (the 15th rent payment).

On January 1, 2013, Sweetwater Furniture Company leased office space under a 21-year operating lease agreement. The contract calls for annual rent payments on December 31 of each year. The payments are $21,000 the first year and increase by $250 per year. Benefits expected from using the office space are expected to remain constant over the lease term.

Explanation / Answer

Assuming the first rent payment made in Jan 2013 So Lease rent will increase by $250 from Dec 31 2013 itself. SweetWater Furniture Company Fifth Rent Payment will be =21000+5*250=                    22,250 15th Rent Payment will be =21000+15*250=                    24,750 Journal Entries Date Account Title Dr $ Cr $ Dec 31.2017. Cash                      22,250 Unearned Lease Rent                  22,250 Dec 31.2027. Cash                      24,750 Unearned Lease Rent                  24,750

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