Whiner Corporation is required to make a single payment to its landlord pre-payi
ID: 2558392 • Letter: W
Question
Whiner Corporation is required to make a single payment to its landlord pre-paying the rent for the next 12 months. Whiner's rental paid rent account for the year ended 2009 Prepaid Rent payment covers the period beginning on 7/1" and ending on 6/o of each year. After making year-end adjustments Whiner had the following activity in its pre- BB 1/1/2009 6,000 18,000 EB 12/31/2009 9,000 15,000 how min Given the above information, what was the amount of expense that Whiner would have recorded on its accrual basis income statement for the year ended 12/31/2009? A. $24,000 B. $18,000 C. $15,000 D. $9,000 E. None of the above Which of the following statements best describes Whiner's rental agreement at 7/1/2008 versus 7/1/2009? 7. A. Whiner's annual rent payment increased by $6,000 between 7/1/08 and 7/1/09 B. whiner's annual rent payment decreased by $3,000 between 7/1/08 and 7/1/09 C. whiners annual rent payment increased by $3,000 between 7/1/08 and 7/1/09. D. Whiner's annual rent payment decreased by $9,000 between 7/1/08 and 7/1/09, E. The problem does not provide the necessary information to answer this question.Explanation / Answer
Solution 6:
Amount of expense that whiner recorded on its accrual basis income statement = Credit to prepaid rent account = $15,000
Hence option C is correct.
Solution 7:
Amount of rent expense recognized in 2009 = $15,000
Rent from 01.7. 2009 to 30.06.2010 = $18,000
Rent for 1 month = $18,000 / 12 = $1,500
Rent expense for 01.07.2009 to 31.12.2009 = $1,500*6 = $9,000
Rent expense for 01.01.2009 to 30.06.2009 =$15,000 - $9,000 = $6,000
Rent for 01.07.2008 to 30.06.2009 = $6000*2 = $12,000
Annual rate payment increased from 01.07.2008 to 01.07.2009 = $18,000 - $12,000 = $6,000
Hence option A is correct.
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