On November 1,Duane paid $24,000 in advance for a year's rent.The November 30 adjusting entry for rent expense should include a:
A)debit Rent Expense,$24,000.
B)credit Prepaid Rent Expense,$24,000.
C)debit Rent Expense,$2,000.
D)credit Cash,$2,000.

Question

Quizplus · Accepted Answer

The November 30 adjusting entry for rent expense should reflect the amount of rent expense used up during the current month of November. Since Duane paid for an entire year of rent in advance, the prepaid rent expense account should be credited for $24,000. However, only one month's worth of rent has been used up in November, which is equal to $2,000 ($24,000/12 months). Therefore, the adjusting entry should include a debit to Rent Expense for $2,000 and a credit to Prepaid Rent Expense for $2,000. So, the correct choice is C.

On November 1,Duane Paid $24,000 in Advance for a Year's