Example of Rent Expense for J&B Incorporated

NOTE 7 - RENT EXPENSE

J&B is estimating 1000 square feet will be needed for its facility. The cost per square foot during the first year of operations is forecasted at $10.00, resulting is a monthly rent expense of $1,000. A 5% increase in rent expense is forecasted for year two and three. The following chart illustrates the total rent expense for each of the forecasted years.

  YEAR 1 YEAR 2 YEAR 3
Rent Expense per year $12,000 $12,600 $13,230