Question

Williams enterprises prepaid eight months of office rent totaling $9,000 on october 1, 2019. assuming williams records deferred expenses using alternative treatment, what would be the entry on october 1, 2019?

-debit rent expense and credit cash for $9,000
-debit prepaid rent and credit cash for $9,000
-debit cash and credit unearned rent for $9,000
-no entry is needed until the expense is incurred

Answer 1

The entry on October 1, 2019, assuming Williams records deferred expenses using alternative treatment would be to debit Prepaid Rent and credit Cash for $9,000.

Step-by-step explanation:

On October 1, 2019, when Williams Enterprises prepaid eight months of office rent totaling $9,000, the correct journal entry, using the alternative treatment for deferred expenses, would be to debit Prepaid Rent and credit Cash for $9,000. The Prepaid Rent account is an asset account that represents payments made for rent in advance of their use or consumption. As time passes and the rent becomes an incurred expense, a portion of the Prepaid Rent will be transferred to Rent Expense. Therefore, the entry on October 1, 2019, would be 'debit Prepaid Rent and credit Cash for $9,000', reflecting the prepayment for future rent.