If a company reporting on a calendar year basis, paid $18,000 cash on January 1 for one year of rent in advance and adjusting entries are made at the end of each month, the balance of Prepaid Rent as of December 1 should be $1,500.
$18,000 x 1/12 = $1,500

Question

Quizplus · Accepted Answer

The company pays $18,000 for one year of rent, which is $1,500 per month. By December 1, 11 months of rent have been used, leaving $1,500 as the balance for December.

If a Company Reporting on a Calendar Year Basis, Paid