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    bibi_baudelaire's Avatar
    bibi_baudelaire Posts: 9, Reputation: 1
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    #1

    Sep 20, 2012, 02:17 AM
    Originally charged to expense - meaning
    Hi everyone, I have a little question:
    To prepare the adjusting entry at year end of "Rent paid in advance, 4,500 $"
    I have to Dr. Rent expense and Cr. Prepaid rent.
    But what if the exercise says "Rent paid in advance, 4,500 $ (originally charged to expense)"? what does this "originally charged to expense mean and how should I proceed now with the adjusting entry? Thank you
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Sep 20, 2012, 09:44 AM
    Rent paid in advance is a prepaid asset. The original journal entry should have been a Debit to Prepaid Rent and a Credit to Cash.

    So you have to correct the journal entry that was incorrectly recorded, or move the amount of Prepaid in advance that has not been expensed yet.

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