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Lease office space: Financial events series, part 5 of 29

Jean signs a lease for TechnolOntario to gain office space. The rent is $3000/month and the term of the lease is 36 months. The annual rent must be paid in advance on the anniversary of the lease.

The journal entry would not record this event. The signing of a lease (or any contract) is not considered a financial transaction for accounting purposes.

Information on this series

To demonstrate how various business transactions and other economic events impact the financial statements, this series tracks the accounts of the first fiscal year of a fictional startup company called TechnolOntario, Inc. Common financial events are introduced and recorded one by one, and they accumulate on the financial statements as TechnolOntario’s fiscal year progresses.

References

Markle, K. (2004, August). Introduction to Accounting. Presentation delivered at Schulich School of Business, York University, Toronto, Canada.