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askLloydathome
Sep 30, 2010, 04:37 AM

pready
Sep 30, 2010, 11:34 AM
What is the question? Prepaid rent expense is a current asset because you have paid your rent in advance.

For example I paid 3 months of rent on 1 December. The rent used in December will be used in December and the other 2 months will be the next accounting period.

The journal entry to record the rent will be:
1 Dec) Debit Prepaid Rent for the 3 months of the rent
Credit Cash for the amount

31 Dec) Debit Rent Expense for the amount rent used in the month
Credit Prepaid Rent for the amount.

At 1 Jan the next accounting period you will have a Current Asset of Prepaid rent for 2 months of rent.