The bookkeeper recorded prepaying rent in the amount of $1,200 incorrectly as $2,100. Which of the following journal entries will correct the ledger accounts if the business records prepaying expenses by debiting an asset account?
A) $$\begin{array} { | c | r | r | }
\hline \text { Accounts receivable } & 900 & \
\hline \text { Prepaid rent expense } & & 900 \
\hline
\end{array}$$
B) $$\begin{array} { | c | r | r | }
\hline \text { Cash } & 900 & \
\hline \text { Prepaid rent expense } & & 900 \
\hline
\end{array}$$
C) $$\begin{array} { | c | r | r | }
\hline \text { Cash } & 900 & \
\hline \text { Rent expense } & & 900 \
\hline
\end{array}$$
D) $$\begin{array} { | c | r | r | }
\hline \text { Rent expense } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$$

Question

The bookkeeper recorded prepaying rent in the amount of $1,200 incorrectly as $2,100. Which of the following journal entries will correct the ledger accounts if the business records prepaying expenses by debiting an asset account?
A) $$\begin{array} { | c | r | r | } 
\hline \text { Accounts receivable } & 900 & \
\hline \text { Prepaid rent expense } & & 900 \
\hline
\end{array}$$
B) $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 900 & \
\hline \text { Prepaid rent expense } & & 900 \
\hline
\end{array}$$
C) $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 900 & \
\hline \text { Rent expense } & & 900 \
\hline
\end{array}$$
D) $$\begin{array} { | c | r | r | } 
\hline \text { Rent expense } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The correct entry to adjust the overstatement of prepaid rent involves decreasing the Prepaid Rent Expense account (an asset) by $900 to correct the error (from $2,100 to the correct amount of $1,200) and decreasing Cash (another asset) by the same amount to balance the entry, as no actual cash movement occurs with this correcting entry.