Final answer:
To record the year-end adjusting entry for rent expense, debit the Rent Expense account and credit Prepaid Rent or Accounts Payable depending on if the rent was prepaid or is yet to be paid.
Step-by-step explanation:
The subject of this question is regarding making an adjusting entry for rent expense in accounting at the end of the fiscal year. To record rent expense for the year on December 31, you must make an adjustment to the financial statements to reflect expenses that have occurred but have not yet been recorded. The adjusting entry typically involves a debit to the Rent Expense account and a credit to the Prepaid Rent account if the rent was initially recorded as a prepaid expense, or a credit to the Accounts Payable if the rent has not yet been paid.
- Debit Rent Expense (for the portion of rent that pertains to the current fiscal period)
- Credit Prepaid Rent or Accounts Payable (depending on the situation)
This entry ensures that the rent expense is matched with the revenues of the period it relates to, in accordance with the matching principle of accounting.