If a company reporting on a calendar year basis, paid $18,000 cash on January 1 for one year of rent in advance (lease beginning January 1), and adjusting entries are made at the end of each month, the balance remaining in Prepaid Rent on December 1 should be $1,500.

Question

Quizplus · Accepted Answer

The adjusting entry at the end of each month will reduce Prepaid Rent by 1/12 of the $18,000 paid, or $1,500. Therefore, the balance remaining in Prepaid Rent on December 1 should be $1,500.

If a Company Reporting on a Calendar Year Basis, Paid