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Question - Large Mart has previously attempted to develop a "study pillow" which would have allowed students to upload study material into their brain whilst sleeping. However, Large Mart has recently discovered that an American company called Bpple already holds a patent for this type of device. As a result, Large Mart has given up on its development attempts and decided to sell the Bpple product, which is called iSLEEP.
In order to sell the iSLEEP, Large Mart has rented a second store in Armidale. The renting contract is for a period of 6 month, with the possibility to extend the contract by a further 3 month. Large Mart signs the renting contract on the 1 May 201x. The rent for the store will be $10,000 per month, and rent payments will be made by bank transfer on the last day of each month.
Provide all journal entries that are necessary in the books of Large Mart to account for the signing of the renting contract (if any) and the payment of rent for the month of May 201x, and provide a detailed explanation why you have chosen the accounting treatment that you have used.
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