The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000 and represents three months rent starting on November 1. The adjusting entry required on December 31, assuming adjusting entries have not previously been made, is
A) debit Prepaid Rent, $ \$ 4,000 $; credit Rent Expense $ \$ 4,000 $.
B) debit Prepaid Rent, $ \$ 8,000 $; credit Rent Expense, $ \$ 8,000 $.
C) debit Rent Expense, $ \$ 12,000 $; cre dit Prepaid Rent, $ \$ 12,000 $.
D) debit Rent Expense, $ \$ 8,000 $; credit Prepaid Rent, $ \$ 8,000 $.

Question

The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000 and represents three months rent starting on November 1. The adjusting entry required on December 31, assuming adjusting entries have not previously been made, is 
A) debit Prepaid Rent, $ \$ 4,000 $; credit Rent Expense $ \$ 4,000 $.
B) debit Prepaid Rent, $ \$ 8,000 $; credit Rent Expense, $ \$ 8,000 $.
C) debit Rent Expense, $ \$ 12,000 $; cre dit Prepaid Rent, $ \$ 12,000 $.
D) debit Rent Expense, $ \$ 8,000 $; credit Prepaid Rent, $ \$ 8,000 $.

Quizplus · Accepted Answer

The rent covers three months from November 1 to January 31. By December 31, two months of rent have been used, so $8,000 ($12,000/3 months * 2 months) should be expensed.

The Balance in the Prepaid Rent Account Before Adjustment at the End