ABC Tax Planning Service started business in January 2018. The company rented an office for $5,400 per month starting from January 1, 2018. On that day, ABC prepaid the rent through June 30. The company makes adjusting entries at the end of each month. What is the balance in the Prepaid Rent account as of April 30, 2018?

balance in the Prepaid Rent account as of April 30 is $10800

Explanation:

given data

rent office = $5,400 per month

rent paid = 6 month i. e January 1 to June 30

to find out

balance in the Prepaid Rent account as of April 30

solution

we know here that Period Expired till April 30 = 4 months (January 1 to April 30)

and

so Period Balance = 2 Months (May 1 to June 30)

so Prepaid Rent is = Balance Period * Rent per month

Prepaid Rent = 2 * 5,400

Prepaid Rent = $10800

so balance in the Prepaid Rent account as of April 30 is $10800