Question

On July 1 the Wildhorse Co. paid $25920 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 Wildhorse Co. is:

Answer 1

Dr Rent Expense $4,320

Cr Prepaid Rent $4,320

Step-by-step explanation:

Preparation of the adjusting Journal entry to be made by the Wildhorse Co.

Based on the information given we were told that the company paid the amount of $25,920 to another company which is Acme Realty for 6 months rent that begins July 1 in which the Prepaid Rent was as well debited for the full amount, Hence the adjusting Journal entry to be made by the Wildhorse Co will be to:

Dr Rent Expense $4,320

Cr Prepaid Rent $4,320

($25,920/6 months)