knowledge check 01\non january 1, a company pays one year of rent in advance for $12,000 ($1,000 per month)…

knowledge check 01\non january 1, a company pays one year of rent in advance for $12,000 ($1,000 per month). on january 31, the adjusting entry is recorded as:\nmultiple choice\ndebit prepaid rent $1,000, credit cash $1,000\ndebit rent expense $12,000, credit prepaid rent $12,000\ndebit rent expense $1,000, credit prepaid rent $1,000\ndebit rent expense $1,000, credit cash $1,000

knowledge check 01\non january 1, a company pays one year of rent in advance for $12,000 ($1,000 per month). on january 31, the adjusting entry is recorded as:\nmultiple choice\ndebit prepaid rent $1,000, credit cash $1,000\ndebit rent expense $12,000, credit prepaid rent $12,000\ndebit rent expense $1,000, credit prepaid rent $1,000\ndebit rent expense $1,000, credit cash $1,000

Answer

Brief Explanations:

When a company pays rent in advance, it records a prepaid asset. As time passes, an adjusting entry is made to recognize the expense for the period. Since the monthly rent is $1,000 and one - month has passed by January 31, rent expense of $1,000 needs to be recognized. This is done by debiting Rent Expense and crediting Prepaid Rent to reduce the prepaid amount.

Answer:

C. Debit Rent Expense $1,000, Credit Prepaid Rent $1,000