Compute the rental cost for each full month

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On September 1, Northhampton Industries signed a six-month lease for office space, which is effective September 1. Northhampton agreed to prepay the rent and mailed a check for $12,000 to the landlord on September 1. Assume that Northhampton prepares adjustments only four times a year: on March 31, June 30, September 30, and December 31.

Required

1. Compute the rental cost for each full month.

2. Identify and analyze the effect of the transaction for the payment of rent on September 1.

3. Identify and analyze the effect of the adjustment on September 30.

4. Assume that the accountant prepares the adjustment on September 30 but forgets to record an adjustment on December 31. Will net income for the year be understated or overstated? By what amount?

Reference no: EM13177468

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