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On October 1, Year 2, Stokes Company paid Eastport Rentals $4,800 for a 12-month lease on warehouse space.

Required:

a. Record the deferral and the related December 31, Year 2, adjustment for Stokes Company in the accounting equation.
b. Record the deferral and the related December 31, Year 2, adjustment for Eastport Rentals in the accounting equation.

Sagot :

abiolataiwo2015

a. To Record the deferral and the related December 31, Year 2, adjustment for Stokes Company in the accounting equation.

Stokes Company accounting equation.

Events Assets=Liabilities+ Stockholder's Equity

Cash =Unearned Revenue+Common stock+Retained earnings

Received rent $4,800=$4,800 - -( 12 months)

Received rent - ($1,200) - ($1,200)(3 months)

($4,800×3/12)



b. Record the deferral and the related December 31, Year 2, adjustment for Eastport Rentals in the accounting equation.

Eastport Rentals  accounting equation

Events Assets=Liabilities+ Stockholder's Equity

Cash =Unearned Revenue+Common stock+Retained earnings

Received rent $4,800=$4,800   -         -( 12 months)

Received rent      -        ($1,200)  -          ($1,200)(3 months)

($4,800×3/12)

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