Reference no: EM132420588

Gino's bakery is a small business which makes a range of breads and cakes that it sells to coffee shops in and around town. The business rents a building in a mall from a landlord under a short-term lease at a cost of $20 000 per month. Part of the building is sublet by The Gino Bakery to the hot coffee shop, an artisanal coffee outlet, for $3000 per month under a short-term lease. Subletting part of the building has been successful in encouraging customers to come and buy cakes to have with their coffee.

Consider the following four unrelated scenarios relating to the Gino bakery rental agreement during December 2018:

A-1 Rent of $20 000, owed to the landlord for the rent of the building during December 2018 was still payable at the end of December 2018.

A-2 Paid cash of $60 000 at 20 December 2018 to the landlord in respect of rent for the building for the period from 1 January 2019 to 31 March 2019.

B-1 Rent of $3000, due from the tenant(The Hot Coffee Shop) for the rent of part of the building during December 2018 was still receivable at the end of December 2018.

B-2 Received cash of $9000 at the end of December 2018 from The Hot Coffee Shop in respect of rent for the sub-lease of part of the building from 1 January 2019 to 31 March 2019.

For each of the scenarios listed above, and assuming the recognition criteria is met:

a) Journalize the entries to record the above transactions.

b) With reference to the definitions in the Conceptual framework, explain how each of the transactions above will be recognized in the financial statement of Gino's bakery for the year ended 31 December 2018.