Question

On 1 January 2018, an Office had a balance of prepaid rent of $14,760. On 31...

On 1 January 2018, an Office had a balance of prepaid rent of $14,760. On 31 March 2018, it paid $68,400 rent for 12 months to 31 March 2019. For the financial statements for the year ended 31 December 2018, please calculate the rent expense for the year of 2018.

Homework Answers

Answer #1

Total rent expense = Last year prepaid expense + Current year only to the amount attribute to the current year.

Last year prepaid expense means that the expense belongs to the current year.

Current year per month rent expense

= 68,400/12

= 5,700

It is paid for March 18 to March 19 therefore for the current year only 9 months will be taken into consideration.

Total rent expense

= 14,760 + (5700*9)

= $66,060

Therefore total rent expense for year 2018 will be $ 66,060

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