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New Member
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Dec 16, 2010, 02:05 AM
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Help me about the accounting cycle?
Beginning trial balance :prepaid rent:7,500usd
Q 1:The remaining prepaid rent totally expired.(Jan 22 prepaid rent was 2,000usd for 36 days and 9 days of rent was recognized previous period therefore remaining prepaid rent for software was 1,500usd)
Q2:For adjusment:half of the beginig prepaid rent amount expired
How can I journalize the transaction and do adjustment.
Help mee:(
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Ultra Member
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Dec 16, 2010, 08:51 AM
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Prepaid Rent is an asset for the amount of rent you paid up front and have not used, and would have a debit balance. As it is used you write it off to Rent Expense.
Q1 If the rent is totally expired you write the full amount off.
Q2 If half is expired, you write half off.
If you are still unsure, write out your journal entries in the Answer box at the bottom of the page and we'll check them for you.
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New Member
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Dec 16, 2010, 03:03 PM
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Feb 27: remaning prepaid rent totally expired so I wrote
rent expense 1500
prepaid rent 1500
Ad.1)half of the beginning prepaid rent expired.
beginning prepaid rent :7500
7500-1500(from 27th Feb)=6000
6000/2=3000
Rent expense 3000
prepaid rent 3000
.. is it true ?
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Ultra Member
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Dec 16, 2010, 03:45 PM
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I'm assuming you mean dr Rent Expense and cr Prepaid Rent.
Are these questions Q1 and Q2 independent of each other? Is the info in parenthesis in your Q1 from your question, or did you add that? It's a little confusing.
It says in Q1 that $1500 prepaid rent is remaining. It sounds like that should be at least a part of the Prepaid account after the adjustment. Is there more in Prepaid Rent than the software? The software was $2,000 for 36 days, 9 days expired, leaving 27 days ($2,000/36 days*9 days = $1,500). The Prepaid Rent account though is $7,500. I feel like some info is missing.
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New Member
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Dec 17, 2010, 12:53 AM
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There is no any additional unfortunately.Teacher gave us like this:
01.02.2010,beginning trial balance:7,500usd
Transaction :
Feb 27:The remaining prepaid rent totally expired.(Jan 22 prepaid rent was 2,000usd for 36 days and 9 days of rent was recognized previous period therefore remaining prepaid rent for software was 1,500usd)
Adjustment:
Half of the beginning prepaid rent amount expired.
Unfortunately that's all.
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Ultra Member
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Dec 17, 2010, 01:29 AM
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The dates added (1/2/10, 2/27/10) do make a difference in understanding, but it's still not real clear. This is what I'm seeing:
At 12/31/09, the ending balance of Prepaid Rent is $7,500.
At 1/2/10, the beginning balance of Prepaid Rent is $7,500.
At 1/22/10, the balance of Prepaid Rent is $2,000. That sounds like either $5,500 must have been written off between 1/2 and 1/22, or we are dealing with two or more different items of Prepaid Rent.
At 1/31, the remaining 9 days of January (Jan. 22-31) are written off, bringing the ending balance from $2,000 to $1,500.
At 2/1/10, the beginning balance is $1,500.
At 2/27, they are saying that:
a) the remaining Prepaid Rent expired. Your entry debiting Rent Expense and crediting Prepaid Rent for $1500 is correct.
b) half of the beginning rent expired. This doesn't make sense. The numbers are changing so much. Rent would normally be paid monthly, in equal amounts. Your problem doesn't state that. I feel like there has to be more to this, like another rent payment in February or an explanation of what that beginning balance of $7,500 consisted of. If there are two or more different Prepaid Rent items being tracked it would make more sense, but the problem doesn't state that. Can you verify with your teacher that the problem is stated correctly as you have it?
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New Member
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Dec 17, 2010, 01:40 AM
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Comment on Just Looking's post
Thank you very much
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