Financial Accounting Question?

Financial Accounting Question?

On July 1, 2012, Charlie Co. paid $18,000 to Rent-An-Office for rent covering 18 months from July 2012 through December 2013. What adjusting entry should Charlie Co. record on December 31, 2012?

A) Rent exp 18,000

cash.........................18,000

B) Prepaid rent 6,000

Rent exp. ........................6,000

C) rent exp. 6,000

Prepaid rent ......................6,000

D) Rent expense 18,000

Prepaid rent.......................18,000

1 Answer

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  • 8 years ago
    Favorite Answer

    Prepaid rent a/c Dr. 12000

    To Rent expense a/c ----- 12000

    The answer is (B) but the amount is $12000 NOT $6000

    because 12 months rent is paid in advance.

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