Question

Prepaid Rent in the worksheet's unadjusted trial balance column is $5,000. Prepaid Rent in the balance sheet column is $3,000. Which of the following entries would have caused this difference?

A. a $2,000 debit entry to Rent Expense in the worksheet's adjustments column
B. a $2,000 credit entry to Prepaid Rent in the worksheet's adjustments column
C. a $3,000 credit entry to Rental Revenue in the worksheet's adjustments column
D. a $3,000 credit entry to Prepaid Rent in the worksheet's adjustments column
E. None of the above

Answer 1

A $2,000 debit entry to Rent Expense in the worksheet's adjustments column caused the difference in Prepaid Rent amounts.

Step-by-step explanation:

The difference between the Prepaid Rent in the worksheet's unadjusted trial balance column and the balance sheet column can be attributed to the entries made in the worksheet's adjustments column.

A debit entry to Rent Expense in the worksheet's adjustments column would decrease Prepaid Rent and increase Rent Expense. However, since the question states that Prepaid Rent in the balance sheet column is $3,000, it means that the debit entry to Rent Expense was $2,000, resulting in a decrease of $2,000 in Prepaid Rent.

Therefore, the correct answer is option A. A $2,000 debit entry to Rent Expense in the worksheet's adjustments column caused the $2,000 difference between the Prepaid Rent amounts.