Question

On December 1, 2009, Fleet company paid $30,000 rent for some office space which was debited...

On December 1, 2009, Fleet company paid $30,000 rent for some office space which was debited in full to the prepaid rent expense account. The rent was for three months. Assuming Fleet's accounting year ends December 31, give the adjusting entry required on dece,ber 31, 2009.

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Answer #1
Total months remained in accounting year 1
Total months of service 3
Service that will be rcognised for 1 month ending in accounting year as on december 31
= $     30,000 x 1/3
= $     10,000
Adjusting Entry:
Date Account titles and explanations Debit Credit
December 31, 2009 Rent Expense $ 10,000
Prepaid Rent $ 10,000
(To record adjustments of prepaid rent Expense)
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