On 1 March 2013, Joy Company paid $4 000 in advance for an 8- month rental space covering the period of March 2013 to October 2013. The business makes adjusting entries once a year on 30 June. The adjusting entry at 30 June 2013 would include a:
A)credit of $2 000 to Rent expense on 30 June 2013.
B)debit of $2 000 to Rent expense on 30 June 2013.
C)debit of $4 000 to Prepaid rent expense on 30 June 2013.
D)debit of $2 000 to Prepaid rent expense on 30 June 2013.

Question

Quizplus · Accepted Answer

The rent expense for 4 months (March to June) is $2,000, so a debit to Rent expense is needed to recognize this cost.

On 1 March 2013, Joy Company Paid $4 000 in Advance