Question 7 7 marks

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 30September 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. [1 mark]
2. The necessary adjustments on 30September 2019. [2 marks]
3. The closing entry on 30 September 2019. [2 marks]

	Particulars	Debit	Credit
a)
b)
c)

4. What effect would there on the Balance Sheet and P/L if entry (b) was not made? [2 marks]