[Sally Li-Hui Yang]

CPA-00613: “Kemp must determine the December 31, Year 1 year-end accruals for rent expense. A store lease, effective December 16, Year 0 calls for fixed rent of $1200 per month, payable one month from the effective date and monthly thereafter.”

In its December 31, Year 1 balance sheet, Kemp should report accrued liabilities of?

Answer: Store lease fixed rent ($1,200 x 1/2 month) = $600

My question is how i should have know the rent payable will be paid by the entity monthly? I thought from the question, the rent payable generated monthly…

[mla1169]

Effective date is 12/16, and it's due one month from the effective date which would be 1/16.

At the end of December nothing has been paid yet, but 1/2 a month of rent has been used so there needs to be an accrual to the expense of 1/2 month or $600.

The question states that the payments are due monthly so that part is a given.

FAR- 77
AUD -49, 71, 84
REG -56,75!
BEC -75

Massachusetts CPA (non reporting) since 3/12.

[mla1169]

Effective date is 12/16, and it's due one month from the effective date which would be 1/16.

At the end of December nothing has been paid yet, but 1/2 a month of rent has been used so there needs to be an accrual to the expense of 1/2 month or $600.

The question states that the payments are due monthly so that part is a given.

FAR- 77
AUD -49, 71, 84
REG -56,75!
BEC -75

Massachusetts CPA (non reporting) since 3/12.

[CPA soon]

Double post

FAR - 71, 68, 74, (8/31/14) 78 ✔
REG - 67, 71, 71, (10/18/14) 78 ✔
BEC - (11/29/14) 86 ✔
AUD - 73, (4/4/15) 86 ✔

I can't believe this is over! 2 years and 3 months..

[CPA soon]

Double post

FAR - 71, 68, 74, (8/31/14) 78 ✔
REG - 67, 71, 71, (10/18/14) 78 ✔
BEC - (11/29/14) 86 ✔
AUD - 73, (4/4/15) 86 ✔

I can't believe this is over! 2 years and 3 months..

[CPA soon]

You are accruing for the liability, you are not paying yet. Payment has nothing to do with the accrual.

So on Dec 31st you are booking the following:

DR – Rent Expense

CR – Rent Payable

Then later when paid:

DR – Rent Payable

CR – Cash

FAR - 71, 68, 74, (8/31/14) 78 ✔
REG - 67, 71, 71, (10/18/14) 78 ✔
BEC - (11/29/14) 86 ✔
AUD - 73, (4/4/15) 86 ✔

I can't believe this is over! 2 years and 3 months..

[CPA soon]

You are accruing for the liability, you are not paying yet. Payment has nothing to do with the accrual.

So on Dec 31st you are booking the following:

DR – Rent Expense

CR – Rent Payable

Then later when paid:

DR – Rent Payable

CR – Cash

FAR - 71, 68, 74, (8/31/14) 78 ✔
REG - 67, 71, 71, (10/18/14) 78 ✔
BEC - (11/29/14) 86 ✔
AUD - 73, (4/4/15) 86 ✔

I can't believe this is over! 2 years and 3 months..

[Author]

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