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Question: On December 31, the Human Bean Coffee Shop paid $12.000 for a full year of rent beginning on January 1. The rent payment was appropriately recorded in the Cash and Prepaid Rent accounts. It financial statements are prepared on January 31, the journal entry to record the adjustment would be:
- Debit Rent Expense and credit Prepaid Rent for $1000.
- Debit Rent Expense and credit Prepaid Rent for $12,000.
- Debit Prepaid Rent and credit Rent Expense for $12,000.
- Debit Prepaid Rent and credit Rent Expense for $1,000.
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