On December 1, 20x1, Entity D paid $12,000 for the rent covering a 6-month period from December 1, 20x1 to May 31, 20x2. Prepare journal entries on the following dates:
$12,000 cash paid on December 1 is prepaid expense, since the entity did not use office space yet.
Rent expense for December 20x1 is recognized.
Monthly rent expense = $24,000 / 6 months = $2,000