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:

1.

The journal entry on April 1, 2007

 Prepaid rent \$36,000 Cash \$36,000

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

2.

The adjusting journal entry on December 31, 2007

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

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

3.

The adjusting journal entry on December 31, 2007

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

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

4.

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

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