The journal entry for recording payment for the short-term lease of a fixed asset would
A) be a memo entry only
B) debit the fixed asset and credit Cash
C) debit Rent Expense and credit Cash
D) debit a liability and credit Cash

Question

Quizplus · Accepted Answer

Payment for a short-term lease of a fixed asset would result in a decrease in Rent Expense, which would be debited. The source of funds would be Cash and hence Cash would be credited. There is no change to the fixed asset, so it should not be debited. Recording a liability is not necessary because a short-term lease does not create a long-term obligation on the part of the lessee. Therefore, option C is the correct journal entry.

The Journal Entry for Recording Payment for the Short-Term Lease