Question

The Smith Corporation paid $23,000 in advance for six months of rent. Which of the following records this transaction?

a. debit Cash and credit Prepaid Rent for $23,000.
b. debit Rent Expense and credit Cash for $23,000.
c. debit Prepaid Rent and credit Cash for $23,000.
d. debit Cash and credit Unearned Rent for $23,000.

Answer 1

The correct answer is option c: debit Prepaid Rent and credit Cash for $23,000.

Step-by-step explanation:

The correct answer is option c: debit Prepaid Rent and credit Cash for $23,000.

When the Smith Corporation pays $23,000 in advance for six months of rent, it is recorded as a debit to the Prepaid Rent account and a credit to the Cash account.

Here's an example:

1. Debit: Prepaid Rent $23,000
2. Credit: Cash $23,000