On January 1,2013,Jo Corporation Leased Some Machinery for Two Years,paying

question 133

Multiple Choice

On January 1,2013,Jo Corporation leased some machinery for two years,paying $7,500 per year each December 31.The lease is considered to be an operating lease.How would the company record this transaction?

• A)Debit Rental Expense for $7,500 and credit Cash for $7,500.
• B)Debit Rental Expense for $15,000 and credit Cash for $15,000.
• C)Debit Leased Assets for $7,500 and credit Lease Liability for $7,500.
• D)Debit Leased Assets for $15,000 and credit Lease Liability for $15,000.
• E)Debit Interest Expense $7,500 and credit Cash for $7,500.

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Definitions:

Transaction

An exchange or transfer of goods, services, or funds between two or more parties.

Account Type

A classification used in accounting to differentiate various types of financial records, such as assets, liabilities, equity, revenues, and expenses.

Profitable

A financial condition where income exceeds expenses resulting in a net gain.

Accounting Equation

The fundamental formula in accounting that states that assets equal liabilities plus equity.