The CHS Company paid $30,000 cash to its landlord on November 1, 2014 for rent covering the six-month period from November 1, 2014 through April 30, 2015. The books are adjusted only at year-end. Which of the following does not correctly describe the effect on CHS Company's financial statements of the December 31, 2014 adjusting entry?
A) Net income decreases $10,000.
B) Prepaid rent decreases $10,000.
C) Rent expense increases $10,000.
D) Stockholders' equity increases $10,000.
Correct Answer:
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