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    askLloydathome's Avatar
    askLloydathome Posts: 2, Reputation: 1
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    #1

    Sep 30, 2010, 04:37 AM
    Prepaid rent expense
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    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.
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