On September 1,2011,Joy Company Paid $4,000 in Advance for an 8-Month

question 68

Essay

On September 1,2011,Joy Company paid $4,000 in advance for an 8-month rental space covering the period of September,2011 through April,2012.The business makes adjusting entries once a year at year-end.The adjusting entry at December 31,2011 would include a:
A) debit of $4,000 to Prepaid rent expense on December 31, 2011.
B) debit of $2,000 to Prepaid rent expense on December 31, 2011.
C) debit of $2,000 to Rent expense on December 31, 2011.
D) credit of $2,000 to Rent expense on December 31, 2011.

• A) debit of $4,000 to Prepaid rent expense on December 31, 2011.
• B) debit of $2,000 to Prepaid rent expense on December 31, 2011.
• C) debit of $2,000 to Rent expense on December 31, 2011.
• D) credit of $2,000 to Rent expense on December 31, 2011.

---

Definitions:

Equity Securities

Financial instruments that represent ownership interest in a company, such as stocks.

Debt Securities

Financial instruments representing money borrowed that must be repaid, such as bonds, bills, or notes.

Model Business Corporation Act

A model set of laws prepared by legal experts to guide states in the development of their corporate statutes.

Shares

Units of ownership in a corporation or financial asset that represent an equal proportion of its capital.