On April 1, Smith & Johnson paid $30,000 for rent on warehouse space one year in advance. If Smith & Johnson makes the appropriate adjusting entry, how much will be reported on the December 31 balance sheet as prepaid rent?
A) $22,500
B) $30,000
C) $ 0
D) $ 7,500

Question

Quizplus · Accepted Answer

By December 31, nine months of the prepaid rent have been used, leaving three months remaining. Therefore, the prepaid rent reported on the balance sheet would be $30,000 * (3/12) = $7,500.

On April 1, Smith & Johnson Paid $30,000 for Rent