Joy Company paid $4,500 for an 8-month lease on September 1, 2010. The adjusting entry would include a:

Question

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The lease covers 8 months, but only 4 months (September through December) have passed by December 31, 2010. The monthly rent is $4,500 / 8 = $562.50. For 4 months, the expense is $562.50 * 4 = $2,250. This amount should be debited to Rent Expense to recognize the expense incurred up to December 31, 2010.

Joy Company Paid $4,500 for an 8-Month Lease on September