Question

Gracie, Inc. made a prepaid rent payment of $2,800 on January 1. The company's monthly rent is $700. The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is:_________.

Answer 1

The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is $2,100.

Step-by-step explanation:

Prepaid Rent is the payment of rent in advance for a specified period of time.

A rent of 4 months has been paid in advance on January 1 at the rate of $700 per month.

January 1

The Journal Entry to recorded prepaid rent was as follow:

Dr. Prepaid Rent $2,800

Cr. Cash $2,800

January 31

The Journal Entry to recorded accrued rent expense for the month January was as follow:

Dr. Prepaid Expense $700

Cr. Prepaid Rent $700

Amount of prepaid rent = $2,800 - $700 = $2,100