Question

using proper Cornsulting (WQ by investing 360,000 Furniture wan purchaned ago for $35,000 and has beon used ty Mir. Day parsonaily WCpurchased office paid at the time of purchame The supplies for use over the ned few months for $2.000 $500 wan paid on September 5 Aug 13 WCcomplieted consulting work for its first dient and billed $25,000. One qurter is due on August 26, the balance is due Ortober 31 Collected the amount due from its dlient Aug 26 Aug 30 WCpaid its employoes $3200 Aug30 WCdetermined that $800 of supplies purchased on August 6 were stil that $800 of supplies purchased on August 6 were still on hand 30 WC oollected $12,000 from its 2ne dient for work to be done in September account in error for December financal The prepaid rent of $2.000 was posted to the rent expense December 31. What is the effect of this error on the statements?

Answer 1

answer to the part 3 as asked

the correct journal entry for prepaid expense of $2000 is

Prepaid rent A/C $2000 --

To Cash A/C -- $2000

But the entry has been made to rent expense due to this financial statements current assets will be decreased by $2000 and expenses will be increased by $2000.Gross profit for december finacial statements will be decreased by $2000.

Thank You!