Question

On January 1 of the current​ year, Chuy Company paid $ 1 comma 800 in rent to cover six months​ (January -​ June). Chuy recorded this transaction as​ follows: LOADING...​(Click the icon to view the​ transaction.) Chuy​'s adjusting entry at the end of February included a debit to Rent Expense in the amount of $ 300. What effect does the adjusting entry have on Chuy​'s net income for​ February? A. Net income will increase by $ 300 B. Net income will decrease by $ 600 C. Net income will decrease by $ 300 D. Net income will increase by $ 600

Answer 1

C. Net income will decrease by $ 300

Step-by-step explanation:

rent expense 300 debit

prepaid rent 300 credit

the entry decrease the prepaid expense (asset) and recognize the accrued expense for the period (rent of February)

As this entry recognzie an expense, the net income decreases by this amount as it decrases the net proceeds from revenues