Prepaid Rent in the worksheet's unadjusted trial balance column is $6,000.Prepaid Rent in the balance sheet column is $5,000.Which of the following entries would have caused this difference?
A)a $1,000 debit entry to Prepaid Rent in the worksheet's adjustments column
B)a $1,000 credit entry to Rent Expense in the worksheet's adjustments column
C)a $1,000 credit entry to Prepaid Rent in the worksheet's adjustments column
D)a $1,000 credit entry to Rental Revenue in the worksheet's adjustments column

Question

Quizplus · Accepted Answer

The difference between the prepaid rent in the unadjusted trial balance column and the balance sheet column is $1,000. This suggests that $1,000 of prepaid rent has been used up during the accounting period and should be recorded as an expense in the adjustments column. Since prepaid rent is an asset account, a credit entry would decrease its balance, so the correct entry would be a $1,000 credit to Prepaid Rent in the adjustments column (option C). A debit entry to Prepaid Rent in the adjustments column (option A) would increase its balance and make the difference between the columns even greater. A credit entry to Rent Expense (option B) would increase the Rent Expense account, but it wouldn't affect the Prepaid Rent account or its balance. A credit entry to Rental Revenue (option D) would be incorrect because it would increase revenue, not a prepaid asset account like Prepaid Rent.

Prepaid Rent in the Worksheet's Unadjusted Trial Balance Column Is