Question

On January 1, 2018, Wellburn Corporation leased an asset from Tabitha Company. The asset originally cost Tabitha $360,000. The lease agreement is an operating lease that calls for four annual payments beginning on January 1, 2018, in the amount of $31,000. The other three remaining payments will be made on January 1 of each subsequent year. Which of the following journal entries should Tabitha record on January 1, 2018?a. Cash 31,000  Rent expense 31,000  b. Cash 31,000  Lease receivable 31,000        c. Cash 31,000   Rent revenue 31,000        d.Rent revenue 31,000  Cash 31,000       

Answer 1

Answer:

C.Dr Cash 31,000

Cr Rent revenue 31,000

Explanation:

Based on the information given we told that the lease agreement which is an operating lease calls for four annual payments which begins on January 1, 2018, in the amount of $31,000 which means that what Tabitha should record on January 1, 2018 will be to:

Dr Cash 31,000

Cr Rent revenue 31,000