On January 1,Laguna Company paid $16,000 for rent.The rent covers the period January 1 through April 30.Laguna Company recorded Prepaid Rent of $16,000.What is the balance in the Prepaid Rent account on March 1?

Question

Quizplus · Accepted Answer

The rent covers the period from January 1 to April 30, which is a total of 4 months. Therefore, the monthly rent is $16,000/4 = $4,000. Since we want to find out the balance in the Prepaid Rent account on March 1, we need to figure out how many months have passed since January 1 to March 1, which is 2 months. Thus, the balance in the Prepaid Rent account on March 1 is 2 x $4,000 = $8,000. Therefore, the best choice is B.

On January 1,Laguna Company Paid $16,000 for Rent