Question

Suppose on January 1 Andrew​'s Tavern prepaid rent of $ 16 comma 800 for the full year. At November 30​, how much rent expense should be recorded for the period January 1 through November 30​?

Answer 1

Answer:

The rent expense to be recorded on November 30 will be $15400.

Explanation:

The accrual principle in the accounting states that the revenues and expenses for a period should be matched and recorded in their respective periods. Following the principle, we should record the expenses in the period to which they belong. Thus, the rent that is paid in advance is an asset and it will be expensed out as it is consumed.

The rent of $16800 is paid for the period from January to December.

The rent to be recorded as rent expense on 30 November will be for 11 months from January to November.

Rent expense = 16800 * 11/12 = $15400