Question

1,280 Prepaid insurance 1,280 c. Prepaid Rent. On September 1 of the current year, the company prepaid $31,200 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $31.200. Prepaid Rent Step 1. Determine what the current account balance equals. Step 2: Determine what the current account balance should equal Step 3: Record the December 31, adjusting entry to get from step 1 to step 2

Answer 1

1. Current account balance equals 31,200 Beg. Adj. End. prepaid rent 31,200 5,200 26,000 2. Current account balance should equal (31,200-(31,200x4/24) 26,000 3. Record adjusting entry Rent expense Prepaid rent 5,200 5,200