[Anonymous]

So here’s the question on the Becker CD: https://i.imgur.com/UejMFTO.jpg

My question is how and why did they get the $600 for the rent? Where did that whole entry come from and why did they only take 1/2 month’s rent? I did everything right except for factoring that part in… FML.

[Anonymous]

It's because the lease was effective December 16th so they only accrued half a month.

[Anonymous]

@aeroT ok, so that happens in year 0, so why doesnt anything get accrued in year 1?

[wizards8507]

There's nothing to accrue in year 1. In year zero, there is 1/2 month of rent expense incurred but no cash paid so you need an accrual to “catch up” your rent expense.

In year 1, there is already 12 months of rent expense incurred and recorded and 12 months of cash payments. They've been booking the following entry all year:

DR: Rent expense $1,200

CR: Cash $1,200

There's no year-end accrual in year one because rent has already been recorded correctly for the year.

NY CPA

[Anonymous]

We pay the rent monthly on the 15th, so on December 16th we pay $1200. The rest of the month we accrue $600 (half's month rent) which we book with the adjusting journal entry.

Hope that helps!

[Author]

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