Calco Inc. rents its store location. Rent is $9,000 per month, payable quarterly in advance. On July 1, a check for $27,000 was issued to the landlord for the July September quarter.

Required:

Use the horizontal model to show the effects on the financial statements of Calco Inc.:

a. To record the payment on July 1, assuming that all $27,000 is initially recorded as Rent Expense.

b. To record the adjustment that would be appropriate at July 31 if your entry in a had been made.

c. To record the payment on July 1, assuming instead that all $27,000 is initially recorded as Prepaid Rent.

d. To record the adjustment that would be appropriate at July 31 if your entry in c had been made.

e. To record the adjustment that would be appropriate at August 31 and September 30, regardless of how the payment on July 1 had been initially recorded (and assuming that the July 31 adjustment had been made).

f. If you were supervising the bookkeeper, how would you suggest that the July 1 payment be recorded? Explain your answer.

As an alternative to using the horizontal model, write the journal entries to show each of these transactions and adjustments.