a question that i was ask

Luis,

The 7th transaction is interesting.The business is selling supplies to another business.That isnt part of Bob Morins business purpose.Do you think that should be accounted for differently that their regular services?

about the below answer

What is the difference between Prepaid Rent and Rent Expense?

Rent expense - The amount of rent a company pays over whatever period is being covered on the income statement.It is the actual amount of rent paid or amount of prepaid rent used.A company that pays $1,500 a month for rent must debit rent expense for $1,500 and credit cash for $1,500.

Prepaid Rent - Amount of rent that has been paid in advance.It appears on the balance sheet.With prepaid rent, we need to make adjusting entries each month to allocate the amount used to the expense account.For example, a company pays $1,500 in rent each month and has an 11-yearlease so rent is $18,000 per year.I am assuming a calendar year lease beginning Jan. 1.On Jan 1 the company pays for a years rent.This is a debit to prepaid rent for $18,000 and credit cash $18,000.

When rent is prepaid we need to make an adjusting entry each month to reflect that 1 months worth of rent has been used.We do this by a debit to rent expense for $1,500 on Jan. 1, Feb. 1, etc. and a credit to rent expense. If we ran the income statement andthe balance sheet on June 30 we would see that thesetwo account values would be Rent Expense - $9,000 and Prepaid Rent $9,000.