On January 1,Mountbatten Corporation paid $18,000 for a year's advance rent on a building and recorded it as Rent Expense.When financial statements are prepared on March 31,the adjusting entry should include ________.
A)a credit to Cash for $13,500
B)a credit to Rent Expense for $13,500
C)a credit to Prepaid Rent for $4,500
D)a debit to Rent Expense for $4,500

Question

Quizplus · Accepted Answer

The initial entry incorrectly recorded the entire $18,000 as Rent Expense. By March 31, only three months' worth of rent ($4,500) should be expensed. Therefore, $13,500 should be credited to Rent Expense to adjust for the prepaid portion.

On January 1,Mountbatten Corporation Paid $18,000 for a Year's Advance