A 5-Year Lease Contract Is Signed on 1/1/x1 Calling for $4,000

question 73

Multiple Choice

A 5-year lease contract is signed on 1/1/x1 calling for $4,000 to be paid by the lessee on 12/31/x1, and $6,000 on 12/31/x2, x3, and x4.Total lease payments over the lease term are therefore $22,000.The lessee expects to use the leased asset evenly throughout the lease term, which ends 12/31/x4.No payment is due in 20x2.The entry recorded by the lessee for this operating lease, on 12/31/x1 includes which of the following?

• A)dr.rent expense $4,400
• B)dr.rent expense $4,000
• C)cr.rent payable $200
• D)dr.prepaid rent $400

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Definitions:

Safety Cage

A protective framework designed to enclose machinery, equipment, or areas to prevent access by unauthorized personnel and protect them from harm.

Tire Pressure

The measure of air pressure within a tire, typically measured in pounds per square inch (PSI) or bars, crucial for vehicle safety and efficiency.

Specified Value

A precise measurement or standard determined by manufacturers or engineers that a component or system should meet.

Lug Nut Indicators

Safety devices that provide a visual indication if a wheel's lug nuts are loosening, commonly used in vehicles.