Adjusting Entries for Rent Expense

Exercise 1

On September 1, 20x1, Entity A entered into an agreement to rent office space for a year and paid $36,000 for a six-month rent. Prepare journal entries on the following dates:

September 1, 20x1

Paid $36,000 rent for a six-month period from September 1, 20x1 to February 28, 20x2

Prepaid rent

36,000

   Cash

36,000

December 31, 20x1

Record the rent expense for the period from September 1, 20x1 to December 31, 20x1

Rent expense

24,000

   Prepaid rent

24,000

[Note]Monthly rent expense = $36,000 / 6 months = $6,000

Rent expense for the period from September 1 to December 31 = $6,000 x 4 = $24,000