Clipper Company paid $36,000 for May, June, July, and August rent in advance. The company recorded this transaction by increasing the balance in the Prepaid Rent account. The balance in the Prepaid Rent account as of August 1 is:
A) $9,000
B) $- 0-
C) $27,000
D) $18,000

Question

Quizplus · Accepted Answer

The total rent paid was $36,000 for four months, which is $9,000 per month. By August 1, three months (May, June, July) have passed, totaling $27,000 in rent used. Therefore, the remaining balance in the Prepaid Rent account is $9,000 for August.

Clipper Company Paid $36,000 for May, June, July, and August