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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.

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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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