Question

On July 1 the Nash's Trading Post, LLC paid $17760 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Nash's Trading Post, LLC is:

Answer 1

Answer and Explanation:

The adjusting entry is as follows;

Rent expense dr ($17,760 ÷ 6 months) $2,960

To prepaid rent $2,960

(being the rent expense is recorded)

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