Question

On July 1 the Skysong, Inc. paid $19680 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Skysong, Inc. is ________

Answer 1

Answer:

The adjusting entry is as follows;

July 31

Rent Expense                                               Debit        $ 3,280

Prepaid Rent                                                 Credit                       $ 3,280

To record rent expense for the month of July

Explanation:

Prepaid rent payment                                                           $ 19,680

Period of payment                                                                 6 months

Period of benefit                                                                   1 month

Rent expense for 1 month I.e July is computed as

$ 19,680/6 months * 1 month                                                  $ 3,280