Suppose on January 1 Austin 's Tavern prepaid rent of $ 13 comma 200 for the full year. At May 31 , how much rent expense should be recorded for the period January 1 through May 31 ? At May 31, Austin's Tavern should record $ 3,300 of rent expense.

Question

Business

Tyree Sosa

13 December, 20:17

Suppose on January 1 Austin 's Tavern prepaid rent of $ 13 comma 200 for the full year. At May 31 , how much rent expense should be recorded for the period January 1 through May 31 ? At May 31, Austin's Tavern should record $ 3,300 of rent expense.

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Answers (1)

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Ashtyn Hunt · Answer 1

Austin's Tavern should record $5,500 as rent expense at May 31.

Explanation:

When an amount is prepaid, it is recorded in the books by debiting prepaid expense (rent in this case) and crediting cash account. When the expense is incurred, the required entries are debit rent expense and credit prepaid rent.

If $13,200 was prepaid for the full year as at 1 January, as at May 31, expense incurred

= 5/12 * $13,200

= $5,500

Hence Austin's Tavern should record $5,500 as rent expense at May 31.