On July 1, Alaska Store paid $12,000 to Snow Realty for six months rent, starting July 1.Prepaid Rent was debited for the full amount.If financial statements are prepared on July 31, the adjusting entry to be made by Alaska Store is

Question

Quizplus · Accepted Answer

The rent covers six months, so each month costs $2,000 ($12,000/6). By July 31, one month has passed, so $2,000 should be recognized as Rent Expense, reducing Prepaid Rent by the same amount.

On July 1, Alaska Store Paid $12,000 to Snow Realty