Question

On May 1, Nick's Sport Shop of Toledo prepaid six months of rent $4.800 Read the requirements Requirement 1. Record the journal entry for the May 1 payment Record debits first, then credits Select the explanation on the lastne of the journal entry table> Date Accounts and Explanation Debit Credit May 1 Requirement 2. Record the adjusting entry required at May 31 (Record debits first the credits Select the explanation on the last line of the journal entry table Date Accounts and Explanation Debit Credit May 31

Answer 1

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Debit Credit Answer 1 : Entry for prepaid rent Date Accounts and Explanation May 1 Prepaid Rent Cash (Rent paid for 6 months) $ 4,800 $ 4,800 Credit Answer 2 : Adjusting entry at the end of the month Date Accounts and Explanation May 31 Rent Expense Prepaid Rent (Rent for the month expired i.e. $4,800/6 = $ 800) Debit $ 800 $ 800

Cr Answer 3: Posting the journals into T-Accounts Dr Prepaid Rent Cr Dr Date Debit Date Credit Date May 1 $ 4,800 May 31 $ 800 May 1 Bal $ 4,000 Rent Expnense Debit Date $ 800 Bal Credit $ 800 $ 4,800 $ 4,800 $ 800 $ 800