ABC Tax Planning Service started business in January 2018. The company rented an office for $5,400 per month starting from January 1, 2018. On that day, ABC prepaid the rent through June 30. The company makes adjusting entries at the end of each month. What is the balance in the Prepaid Rent account as of April 30, 2018?

Question

Quizplus · Accepted Answer

ABC Tax Planning Service prepaid 6 months of rent at $5,400 per month, totaling $32,400. By April 30, 2018, they would have used 4 months of rent, leaving 2 months prepaid. Thus, the balance in the Prepaid Rent account is 2 months * $5,400 = $10,800.

ABC Tax Planning Service Started Business in January 2018