A transaction in which six months' rent is paid in advance. Which of the following journal entries records the transaction?
A) Prepaid Rent - Debit; Cash - Credit
B) Rent Receivable - Debit; Cash - Credit
C) Rent Revenue - Debit; Cash - Credit
D) Rent Expense- Debit; Cash - Credit

Question

Quizplus · Accepted Answer

The transaction involves the recording of prepaid rent, which is an asset account. Since it is a payment made in advance, cash is credited in the journal entry. Therefore, the correct entry is Prepaid Rent - Debit; Cash - Credit.

A Transaction in Which Six Months' Rent Is Paid in Advance