So, the X ltd will recognize the $ 60,000 rent expense and the $12,000 insurance expense as the prepaid insurance paid the full rent and insurance amount of the 12 months at one time in the beginning. Is paid for the whole year: January 01, 2019. The date when the rent expense and insurance expense Analyze the treatment of the amount paid as rent and insurance for the property by the company and pass the necessary journal entries recording the payment and the adjusting entries for January 2019. As per the agreement, X Ltd has to pay rent of full 12 months in advance (at the beginning of the year on ) itself to the landlord amounting to $ 60,000 for a whole year.Īlso, after taking the property on rent and paying the amount of rent as an advance for one whole year, it took the insurance of the property for which it paid $ 12,000 upfront for the insurance policy of the 12 months to the insurance company on. Y to take the property on rent for one year. started a business, and for that, it requires the property on rent.
#Due to due from journal entries examples how to
How to Record Prepaid Expenses? Example #1Ĭompany X Ltd. As there are situations where the Journal Entry for Prepaid expense can be passed, it is not possible to provide all the types of situations. The following different prepaid expenses journal entries give an understanding of the most common type of situations of how prepaid expense is recorded and accounted for.
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