Question

Hank's Tax Planning Service started business in January 2016. The company rented an office for $1,800 per month starting from January 1, 2016. On that day, Hank 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, 2016?

Answer 1

$3,600

Step-by-step explanation:

Rent per month is $1800

The company prepaid rent for six months. The amount paid was

=$1800 x 6

=$10,800

Between Jan and April 30, the company has made four adjustments to cater for the four months.

Total amount adjusted

=$1800 x 4

=$7,200

The balance will be

=$10,800 - $7,200

=$3,600