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.