Sterling Company paid $1,200 for 3 months for rent on April 1 of the current year. On April 30, Sterling Company made an adjusting entry to account for the rent that expired during of April. The adjusting entry contain a debit to Rent Expense in the amount of $ (blank) and a credit to Prepaid Rent in the amount of $ (blank). The remaining balance in the Prepaid Rent account afterthe adjustment was $800. a. 400b. 400c. 800

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Business

Justice Kirby

26 May, 19:42

Sterling Company paid $1,200 for 3 months for rent on April 1 of the current year. On April 30, Sterling Company made an adjusting entry to account for the rent that expired during of April. The adjusting entry contain a debit to Rent Expense in the amount of $ (blank) and a credit to Prepaid Rent in the amount of $ (blank). The remaining balance in the Prepaid Rent account afterthe adjustment was $800. a. 400b. 400c. 800

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Kristopher Klein · Answer 1

Amount of adjusting entry was $400

Remaining Balance of Prepaid rent account was $800

Explanation:

Prepaid Rent Expense account is made to calculate the remaining balance of prepaid rent:

Prepaid Rent Account DR. CR. Balance

Apr 1. Prepaid rent $1,200 $1,200

Apr 30. Rent Expense for April $400 $800

The remaining balance of prepaid rent account was $800.

$400 was transferred to expense account because rent expense was accrued and adjusted for one month as follows

$1,200 x (1/3) = $400

The remaining balance is $800 ($1,200 - $400).