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    TravisHar's Avatar
    TravisHar Posts: 1, Reputation: 1
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    #1

    May 26, 2008, 08:40 PM
    Journalizing prepaid rent for present and next month
    Dec. 1. Company pays for December 2008 and January 2009 rent. How do I journalize this transaction? Do I use rent expense for December and prepaid rent for January?
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    May 27, 2008, 02:33 AM
    Let us assume Rent is $100 a month.


    On Dec. 1, the JE is
    Dr. Prepaid Rent 200
    Cr. Cash 200

    This JE is made because you have prepaid 2 months rent, for the MONTH of Dec and Jan.


    Now, on Dec. 31, one of the two months have been used up. Therefore the JE would be:
    Dr. Rent Expense 100
    Cr. Prepaid Rent 100

    Now, on Jan. 31, the second month is used up, so the JE would be:
    Dr. Rent Expense 100
    Cr. Prepaid Rent 100


    You will also note that after Jan. 31, the balance in the Prepaid Rent account is 0, as you have used it all up, and its all been put into Rent Expense.

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