The balance in the prepaid rent account before adjustment at the end of the year is $15,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is:
A) debit Prepaid Rent, $5,000; credit Rent Expense $5,000.
B) debit Prepaid Rent, $10,000; credit Rent Expense, $10,000.
C) debit Rent Expense, $15,000; credit Prepaid Rent, $15,000.
D) debit Rent Expense, $5,000; credit Prepaid Rent, $5,000.

Question

Quizplus · Accepted Answer

The rent covers three months, so one month's rent ($5,000) should be recognized as an expense for December.

The Balance in the Prepaid Rent Account Before Adjustment at the End