Question

Assume that cash is paid for rent to cover the next year. The appropriate debit and credit are:

Debit Rent Expense, credit Cash.
Debit Prepaid Rent, credit Rent Expense.
Debit Prepaid Rent, credit Cash.
Debit Cash, credit Prepaid Rent.

Answer 1

Answer:

The correct answer is letter "B": Debit Prepaid Rent, credit Cash.

Explanation:

Prepaid rent is the rent paid in advance. Usually, rent payments are made every month by the beginning of the month but other timeframes can also be agreed upon the lease. Prepaid rent is debited to prepaid assets and credited to accounts payable. When the check for the payment is cut, accounts payable is debited and a cash account is credited.