Question

On April 1, 2007, KA Company paid $36,000 to lease office space for the next twelve...

On April 1, 2007, KA Company paid $36,000 to lease office space for the next twelve months. KA Company debited a temporary account on April 1, 2007 when the cash was paid. KA Company adjusts its books on December 31 each year. (use to answer following questions)

1. The journal entry on April 1, 2007 would include a debit to which account?

a. Retained Earnings

b. Rent Expense

c. Prepaid Rent

d. Cash

e. Accounts Payable

2. The adjusting journal entry on December 31, 2007 would include a debit to which account?

a. Retained Earnings

b. Rent Expense

c. Prepaid Rent

d. Cash

e. Accounts Payable

3. The adjusting journal entry on December 31, 2007 would include a credit to which account?

a. Retained Earnings

b. Rent Expense

c. Prepaid Rent

d. Cash

e. Accounts Payable

4. The amount of the adjusting journal entry on December 31, 2007 is:

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Homework Answers

Answer #1

1.

The journal entry on April 1, 2007

Prepaid rent $36,000
Cash $36,000

The answer is C.

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2.

The adjusting journal entry on December 31, 2007

Rent expense ($36,000*9/12) $27,000
Prepaid rent $27,000

The answer is B.

-----------------------------------------------

3.

The adjusting journal entry on December 31, 2007

Rent expense ($36,000*9/12) $27,000
Prepaid rent $27,000

The answer is C.

-----------------------------------------------

4.

The amount of the adjusting entry on December 31, 2007 = $36,000 * 9 / 12 = $27,000

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