Question

and​ Associates, a law​ firm, paid $30000 for 12​ months' rent in advance on October 1 of the current year. The​ company's fiscal​ year-end is December 31. Prepare the journal entries for the rent payment on October 1 and the necessary adjusting journal entry on December 31. Omit explanations

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Oct 1

Rent expense Dr $30,000

to cash $30,000

(being cash paid)

Here rent expense is debited as it increased the expense and credited the cash as it decreased the assets

On Dec 31

Rent expense Dr ($30,000 × 9 ÷ 12) $22,500

To prepaid rent $22,500

(being rent expense is recorded)

Here ent expense is debited as it increased the expense and credited the prepaid rent as it decreased the assets