On September 1, Northgate paid $18,000 to Evans Management Company for 12 months

Question

On September 1, Northgate paid $18,000 to Evans Management Company for 12 months of rent beginning on September 1. The appropriate journal entry was made to record this transaction. If financial statements are prepared for the 9 months ended September 30, the adjusting entry to be made by Northgate is:

(A)debit Rent Expense, $13,500; credit Prepaid Rent, $13,500.

(B)debit Prepaid Rent, $1,500; credit Rent Revenue, $1,500.

(C)debit Prepaid Rent, $1,500; credit Rent Expense, $1,500.

(D)debit Rent Expense, $1,500; credit Prepaid Rent, $1,500.

(A)debit Rent Expense, $13,500; credit Prepaid Rent, $13,500.

(B)debit Prepaid Rent, $1,500; credit Rent Revenue, $1,500.

(C)debit Prepaid Rent, $1,500; credit Rent Expense, $1,500.

(D)debit Rent Expense, $1,500; credit Prepaid Rent, $1,500.

Explanation / Answer

Solution:

The Journal entry for thr above transaction is -

Rent Expense        $ 1,500

Prepaid Rent          $ 1,500

Therefore,the answer to the above question is (D) debit Rent Expense $ 1,500, Credit Prepaid Rent, $ 1,500

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