Question

Blume Corporation leases equipment for a ten-month period. The entire related lease payment is due at the end of the ten-month period. The journal entry to recognize the monthly accrual related to the lease will include a debit to:

Answer 1

Answer: d. short-term lease expense.

Explanation:

The debit has to go to an expense account to recognize that a lease expense is being incurred. The relevant account would be a short-term lease expense account because the lease is a short term lease as it is to last for less than a year.

The credit will go to an accrued lease account to recognize that it is a current liability because liabilities are credited when they increase.