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Rent Expense

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On Apr. 1: Does Rent Expense need to be listed first and then Prepaid Rent? Why?

April 1 Signed a one year office building rental agreement for $12,000. The company paid the entire amount of $12,000. The portion of the cost related to April is recorded as an expense for April.

Apr 1 Rent Expense 1,000
Prepaid Rent 11,000
Cash 12,000

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Solution Summary

This explains the treatment of Rent Expense.

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No, Rent Expense need not be listed first and then Prepaid Rent.

On April I all the rent will be recorded as prepaid expense. This is because the April month has just started and not completed.

and ...

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