Question

Office rent paid on 20 th May 2019, for the period 1 st June 2019 to...


Office rent paid on 20 th May 2019, for the period 1 st June 2019 to 31 st may 2020 was Rs.24000/-.
When accounting for the above transaction in the books of accounts for the year ending 31/3/2020,
the accounting heads affected and the relevant amounts would be:
aRent Expense A/c Rs.20000/- (increase) Current Liability Rs.4000/- (increase) Cash & bankRs.24000/- (decrease)
bRent Expense A/c Rs.20000/- (increase) Current asset Rs.4000/- (increase) cash & bank Rs.24000/- (decrease)
cRent Expense A/c Rs.20000/- (increase) Investment Rs.4000/- (increase) cash & bank Rs.24000/- (decrease)
dRent Expense A/c : Rs.24000/- (increase) cash & bank Rs.24000/- (decrease)

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Homework Answers

Answer #1

The correct answer is

b Rent Expense A/c Rs.20000/- (increase) Current asset Rs.4000/- (increase) cash & bank Rs.24000/- (decrease)

Explanation

The correct journal entry need to be passed

Particular Debit Credit

Rent Expense $ 20000

Prepaid Rent $ 4000

Bank $ 24000

bank will decrease due to payment of rent for 1 year and current assets (prepaid rent) will increase by $ 4000 (240000*2/12) and rent expense will be booked for $ 20000 (24000*10/12)

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