On October 1, 2013, Siegel Company recorded a journal entry debiting prepaid rent and crediting cash for $1,200 in payment for one year of office rent. At December 31, 2013, the financial statements should report:

Question

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The adjusting entry on December 31 to recognize 3 months of rent expense would decrease prepaid rent by $300 and recognize $300 of rent expense. The remaining $900 of prepaid rent would appear on the balance sheet and the $300 of rent expense would appear on the income statement.

On October 1, 2013, Siegel Company Recorded a Journal Entry