Accounting – 4.3 Other payables and other receivables | e-Consult
4.3 Other payables and other receivables (1 questions)
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Journal Entry (1st July):
Debit: Prepaid Lease £3,600
Credit: Cash £3,600
Explanation: This entry records the payment made in advance for the lease. The Prepaid Lease account is debited, and the Cash account is credited.
Journal Entry (31st December):
Debit: Lease Expense £3,600
Credit: Prepaid Lease £3,600
Explanation: This entry records the lease expense for the year. The Lease Expense account is debited, and the Prepaid Lease account is credited to reduce the prepaid balance.
Ledger Accounts:
| Prepaid Lease |
Debit
- Initial Balance: £3,600
Credit
- Lease Expense: £3,600
| Lease Expense |
Debit
- £3,600 (Credit from Prepaid Lease)
Credit
- Balance: £0