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with the calculation please
North Company agreed to rent more space to West Enterprises, for 28 months. The rental period begins on December 1, 2017 and
for the above. What entry, if any, should West make at the end of December 2017 Wests business year also ends in December
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Answer #1

Answer.

North Company is Lessor and it will earn Rental Revenue from operating lease. West Company is Lessee and it will use leased rental for operating its business.

North company earns Rental revenue for the month of December but it is not received due to deferrals. North Company will Debit Deferred Rent Revenue and credit Rent Revenue.

West company will recognize Rent Expense as its operating expense. On December 1, West company agreed to pay rent of four months Dec. 1 to April 1, after four months and defer its payment for a period of 4 months after which it is paid off. As the benefits of leased property is received by the west company in the month of December, it has to recognize Rent as an Expense, as it is not paid but payable after 4 months, it is recognized as Deferred Rent Expense-a Current Liabilities.

(C) The following entry is recorded by North Company (Lessor) at the end of year.

Date Account Tittle Debit Credit
12/31/17 Deferred Rent Revenue (assets) 7,000
Rent Revenue 7,000
To record deferred rental revenue
( D)The following entry is recorded by West Company- (Lessee) at the end of year
12/31/17 Rent Expense 7000
Deferred Rent Expense 7000
To record deferred rent expense of Dec.
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