Wizardx
Sep 26, 2006, 01:07 AM
You're clearly the most learned and/or the most helpful poster on these boards... I became a member to ask you this simple question regarding adjustments:
Company X has rented its showroom and office space from Z at 7,000 per month for the last 3 years. The rent for January, 2007, was paid in advance on 12/29/06.
It is assumed that this transaction was recorded (prior to 12/31), however, no Prepaid Rent exists on the books. As a result, I am aware that I must create this account and debit 7000 to it. My question is... what do I credit? I'm guessing cash has already been credited if the transaction has previously been recorded and I can't credit the Rent Expense because it hasn't been used up yet --- what basic principle am I missing? Thanks.
Company X has rented its showroom and office space from Z at 7,000 per month for the last 3 years. The rent for January, 2007, was paid in advance on 12/29/06.
It is assumed that this transaction was recorded (prior to 12/31), however, no Prepaid Rent exists on the books. As a result, I am aware that I must create this account and debit 7000 to it. My question is... what do I credit? I'm guessing cash has already been credited if the transaction has previously been recorded and I can't credit the Rent Expense because it hasn't been used up yet --- what basic principle am I missing? Thanks.