Question

Turnkey systems, inc. began the month of june, 2014 with a prepaid expenses balance of $240,000. during the month, debits totaling $110,000 and credits totaling $80,000 were made to the prepaid expenses account. what was the june, 2014 ending balance of prepaid expenses?

Answer 1

The ending balance of prepaid expense can be calculated using the following formula:

Ending balance = Beginning Balance + Debit entries – Credit Entries

We are given the following information:

Beginning Balance = $240,000

Total Debit entries = $110,000

Total Credit entries = $80,000

Hence,

Ending balance = 240000+110000-80000 = 270,000

The ending balance of prepaid expense shall be $270,000