On September 1, 2020, Regal Corp. made the annual lease payment of $ 24,000 for its fleet of delivery trucks. The payment covered the period September 1, 2020 to August 31, 2021. Assuming the entire amount had originally been debited to Lease Expense, the required adjustment at December 31, 2020 is

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The lease payment covers 12 months, so $24,000/12 = $2,000 per month. By December 31, 2020, 4 months have passed, so $8,000 should be expensed, leaving $16,000 as prepaid for the remaining 8 months. Therefore, debit Prepaid Lease and credit Lease Expense $16,000.