Blockade Consulting Services paid 3 months' rent in advance on July 1,at a total cost of $2,400.The rent covers the period from July 1 to September 30.At the time of the payment,prepaid rent was increased by $2,400.What adjusting entry is necessary on July 31?

A)$\begin{array}{llc}
\text { Prepaid rent } & 800 & \
\quad \text { Rent expense } & & 800 \
\end{array}$

B)$\begin{array}{lccc}
\text { Rent expense } & 800 \
\quad \text { Prepaid rent } & & 800 \
\end{array}$

C) $\begin{array}{lccc}
\text { Prepaid rent } &1,600 & \
\quad \text { Rent expense } && 1,600 \
\end{array}$

D)$\begin{array}{lccc}
\text { Rent expense } & 1,600 \
\quad \text { Prepaid rent } & & 1,600
\end{array}$
E)No adjusting entry is necessary.

Question

Blockade Consulting Services paid 3 months' rent in advance on July 1,at a total cost of $2,400.The rent covers the period from July 1 to September 30.At the time of the payment,prepaid rent was increased by $2,400.What adjusting entry is necessary on July 31?

A)$\begin{array}{llc}
\text {  Prepaid rent } & 800 & \
\quad \text { Rent expense } &  & 800 \
\end{array}$

B)$\begin{array}{lccc}
\text {  Rent expense } & 800 \
\quad \text { Prepaid rent } &  & 800 \
\end{array}$

C) $\begin{array}{lccc}
\text { Prepaid rent } &1,600 & \
\quad \text { Rent expense } && 1,600  \
\end{array}$

D)$\begin{array}{lccc}
\text {  Rent expense } &  1,600 \
\quad \text { Prepaid rent } & & 1,600
\end{array}$
E)No adjusting entry is necessary.

Quizplus · Accepted Answer

The total rent for 3 months is $2,400, so the monthly rent is $2,400 / 3 = $800. By July 31, one month has passed, so $800 of the prepaid rent should be recognized as rent expense for July.

Blockade Consulting Services Paid 3 Months' Rent in Advance on July