Pine Corporation Makes Adjusting Entries Monthly

question 29

Multiple Choice

Pine Corporation makes adjusting entries monthly. As of March 31, the general ledger shows Prepaid Rent to have a debit balance of $6,000. Rent expires at a rate of $1,200 per month. No entry for rent has been recorded in the month of March. What adjusting entry is necessary at March 31?

• A) Prepaid Rent 500 Cash 500
• B) Rent Expense 1,200 Cash 1,200
• D) Prepaid Rent 6,000 Rent Expense 6,000

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Definitions:

Declaration

A formal or explicit statement, announcement, or assertion.

Cash Flow Per Share

Normally computed as cash flow from operations per share.

Statement of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Financing Activities

Transaction and events in a business's operations that involve obtaining resources from creditors and repaying those resources or obtaining capital from owners and providing them with a return on, and of, their investment.