Q 6SE-3
Question
On September 1, Big Fan of Toledo prepaid six months of rent, $3,300. Requirements 1. Record the journal entry for the September 1 payment. 2. Record the adjusting entry required at September 30. 3. Using T-accounts, post the journal entry and adjusting entry to the accounts involved and show their balances at September 30. (Ignore the Cash account.)
Step-by-Step Solution
Verified Answer
T-accounts are as follows:
Prepaid Rent | |||
Sep.1 | 3,300 | 550 | Sep.30 |
Bal. | 2,750 |
|
|
Rent Expense | |||
Sep. 30 | 550 |
|
|
Bal. | 550 |
|
|
1Step-by-Step-Solution Step 1: Explanation on Prepaid Rent
Prepaid rent refers to the advance amount of rent paid. It has a normal debit balance.
2Step 2: Explanation on T-account
The ending balance of prepaid rent account is $2,750, and rent expense equals $550.
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