[seekinghelp]

I'm working on ACCRUALS and DEFERRALS I have read the chapter and don't understand how to record the entry.

1. How can I identify which entries can be reversed
2. I don't understand problem Question to be worked

This is not a homework problem just study problem

XX Company fiscal years ends on April 30, X1
On March 15, X1 the company paid 12,000 for two months rent. The payment was debit to rent Expense

I am to adjust and reverse the entry. :confused: :confused:

Is there any book available or CDs to students that can help us get a better understanding of accounting. Step by step example.

[CaptainForest]

Here is what I THINK the question is saying.

On March 15, 2001, you paid 12,000 in advance for 2 months rent (March 15 – May 15).

However, the entry was
Dr. Rent Expense 12,000
Cr. Cash 12,000

It should have been:
Dr. Prepaid Rent 12,000
Cr. Cash 12,000

So, the reversing entry will be:
Dr. Prepaid Rent 12,000
Cr. Rent Expense 12,000

Now, on April 30, you must accrue 1.5 months rent.

Therefore, the JE will be:
Dr. Rent Expense 9,000 (12,000 x 3/4)
Cr. Prepaid Rent 9,000