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Question 1: On 1 July the Winter Shoe Store paid $3,000 to Ace Realty for 6 months rent beginning 1 July. Prepaid Rent was initially recorded as an asset for the full amount. If financial statements are prepared on 31 July, the adjusting entry to be made by the Winter Shoe Store is (ignore GST):
Select one:
a. Debit Prepaid Rent $3,000, Credit Rent Expense $3,000.
b. Debit Prepaid Rent $500, Credit Rent Expense $500.
c. Debit Rent Expense $500, Credit Prepaid Rent $500.
d. Debit Rent Expense $3,000, Credit Prepaid Rent $3,000.
Financial Statement Analysis and Preparation
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