prime reality paid 2400 rent on a building in advance for 2 years on may 1 . the amount that should

Accounting
Tutor: None Selected Time limit: 1 Day

 can you help answer this question?

prime reality paid 2400 rent on a building in advance for 2 years on may 1 . the amount that should be recorded as rent expense as of dec 31 is ?

a) 1200

b) 800

c)525

d)2400

May 7th, 2015


Expense must be recorded in the accounting period in which it is incurred. Therefore, prepaid expense must be not be shown as expense in the accounting period in which it is paid but instead  shown when a period of time ends on time provided,can see that the period are half yearly

2400/24months=100x8=800 a month


May 7th, 2015

Debit...........prepaid expense/rent

Debit ...............cash

Rent expense equals how much money you must pay a lessor every month or quarter, depending on the agreement on payment of rent.

May 7th, 2015

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