how will I journalize this transaction?
Rented a backhoe to Mission Landscaping at a price of $250 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks
To journalize this transaction, you will follow these steps:
1. Identify the accounts involved: In this case, there are two accounts that are affected: Rent Income and Accounts Receivable.
2. Determine the debiting and crediting of each account: Based on the transaction details, we will debit Rent Income and credit Accounts Receivable.
3. Determine the amounts: The Rent Income account will be debited for $250 per day, as that is the agreed price. The Accounts Receivable account will be credited for the same amount.
4. Write the journal entry: Based on the details above, the journal entry will be as follows:
Date | Account | Debit | Credit
[Date] | Rent Income | $250/day |
[Date] | Accounts Receivable | | $250/day
Note: Make sure to include the specific date of the transaction in the first column.
Remember to adjust the journal entry based on the actual number of days the backhoe was rented. If it is rented for two weeks (14 days), the amounts in the journal entry will be multiplied by 14. If it is rented for three weeks (21 days), the amounts will be multiplied by 21.