On October 1, 2013, a company paid $9,000 rent in advance. The rent per month is $1,000. Assuming the company's accounting period ends on December 31, 2013, what will be reported on the financial statements?

Question

Quizplus · Accepted Answer

The prepaid rent of $9,000 should be adjusted for the three months from October 1 to December 31, which is $3,000. Therefore, the prepaid rent on the balance sheet at December 31, 2013, should be $6,000 ($9,000 - $3,000). The rent expense for the year should also be adjusted for the prepaid rent of $3,000, resulting in rent expense of $6,000 ($9,000 - $3,000). Rent revenue is not relevant in this scenario as it is not stated that the company is subletting the property or earning rent from others.

On October 1, 2013, a Company Paid $9,000 Rent in Advance