Posted by Samantha on .
I need help with a problem involving adjusting entries. It is involving rent expense and prepaid rent.
Here is the information I am given on the Unadjusted Trial Balance, Dec. 31, 2005:
Prepaid studio rent: 2,500
Studio rent expense: 11,250
The data says, "The studio pays rent quarterly (every 3 months). The last payment was made November 1, 2005. The next payment will be made early in February 2006."
I know I have to put a debit towards the rent expense and a debit towards prepaid studio rent - but I'm not sure what values to put and what explanation I should put for it.