D is corrent. The leasehold improvement amortization is $9,600 a year ($96,000 ÷ 10 yrs.) or $800 per month ($9,600 ÷ 12 mos.). Accordingly, December’s expenses should have been $15,800, and $95,200 of leasehold improvements should be deferred and amortized over the remainder of the lease. The rent deposit of $15,000 and the last month’s rent of $15,000 should be set up as prepaid assets as shown in the following journal entry.
Leasehold improvements 96,000
Rent expense 15,000
Rent deposit 15,000
Prepaid rent 15,000
Cash 141,000
Leasehold imp. amort. 800
Leasehold improv. 800
A is incorrect. The leasehold improvement amortization is $9,600 a year ($96,000 ÷ 10 yrs.) or $800 per month ($9,600 ÷ 12 mos.). Accordingly, December’s expenses should have been $15,800, and $95,200 of leasehold improvements should be deferred and amortized over the remainder of the lease. The rent deposit of $15,000 and the last month’s rent of $15,000 should be set up as prepaid assets as shown in the following journal entry.
Leasehold improvements 96,000
Rent expense 15,000
Rent deposit 15,000
Prepaid rent 15,000
Cash 141,000
Leasehold imp. amort. 800
Leasehold improv. 800
B is incorrect. The leasehold improvement amortization is $9,600 a year ($96,000 ÷ 10 yrs.) or $800 per month ($9,600 ÷ 12 mos.). Accordingly, December’s expenses should have been $15,800, and $95,200 of leasehold improvements should be deferred and amortized over the remainder of the lease. The rent deposit of $15,000 and the last month’s rent of $15,000 should be set up as prepaid assets as shown in the following journal entry.
Leasehold improvements 96,000
Rent expense 15,000
Rent deposit 15,000
Prepaid rent 15,000
Cash 141,000
Leasehold imp. amort. 800
Leasehold improv. 800
C is incorrect. The leasehold improvement amortization is $9,600 a year ($96,000 ÷ 10 yrs.) or $800 per month ($9,600 ÷ 12 mos.). Accordingly, December’s expenses should have been $15,800, and $95,200 of leasehold improvements should be deferred and amortized over the remainder of the lease. The rent deposit of $15,000 and the last month’s rent of $15,000 should be set up as prepaid assets as shown in the following journal entry.
Leasehold improvements 96,000
Rent expense 15,000
Rent deposit 15,000
Prepaid rent 15,000
Cash 141,000
Leasehold imp. amort. 800
Leasehold improv. 800
