On December 15th you sign a 3 year lease for $2500 a month to begin on January 1 of the new year. The property management company requires a $2500 security deposit. What would the journal entries be on December 15th and January 1?

@Paul Caswell the initial entry, though not asked for would be to debit Pre-paid Insurance for $6000 and credit Cash for $6000; for each month moving forward We would debit Insurance Expense for $500 and credit Pre-paid Insurance for $500 as Heather replied.

I have found that each has a different set of challenges based on the type of business whose financial statements I am working with and my familiarity with that business or industry. Overall, though the statement of Cashflows sometimes can be a bit more challenging than the Income Statement or Balance Sheet for me on occasion.

@Prosper Yohann Kadet speaking in a broad generic sense, my understanding of the BS is easiest when I look at the situation from a personal perspective. I mean I look at assets as anything I have that I can liquidate to satisfy my liabilities (my bills, monies I owe to other people or businesses ) and the remaining value (cash leftover after paying my bills) as Owner’s Equity which should also be the same amount as your assets(cash leftover). I don’t know if that will make sense to you but that is how I understand the Balance Sheet in the most basic terms. As things get more complex it can get more challenging but hopefully this might help you despite my poor explanation.

I am currently a/a truck driver with a BSBA. with an accounting emphasis, working on my MS in Accounting. In 6 months, I want to have obtained an internship or staff role in an accounting firm. To get there, I will further my knowledge by taking additional courses in areas I currently lack exposure, earn credentials, and master AI skills and computer programming languages.

Proverbs 18:16 "A man's gift makes room for him and brings him before great men."