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Martino Ltd is a furniture store operating in the inner Melbourne area. On 1 May 2019 the business paid Nisbet Real Estate $9,600 for rent

Martino Ltd is a furniture store operating in the inner Melbourne area. On 1 May 2019 the business paid Nisbet Real Estate $9,600 for rent for the next 12 months. The financial year for Martino and Nisbet ends on 30 September 2019. Assume Nisbet Real Estate has a policy of using a Liability approach to recording such receipts.

Required:

Prepare the journal entries (narrations are NOT required) to record:

  1. The original journal entry in the books of Nisbet to record the $9,600 rent received.
  2. The necessary adjustments on 30 September 2019.
  3. The closing entry on 30 September 2019.

Particulars

Debit

Credit

a)

b)

c)

  1. What effect would there on the Balance Sheet and P/L if entry (b) was not made?

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