The Balance in the Prepaid Rent Account Before Adjustment at the End

question 7

Short Answer

The balance in the prepaid rent account before adjustment at the end of the year is $15 000,which represents three months' rent paid on May 1.The adjusting entry required on June 30 is:
$\begin{array}{llll}A. \text { DR Rent expense } & \$ 10000 & \text { CR Prepald rent } & \$ 10000 \\B. \text { DR Rent expense } & \$ 5000 & \text { CR Prepaid rent } & \$ 5000 \\C. \text { DR Prepaid rent } & \$ 10000 & \text { CR Rent expense } & \$ 10000 \\D.\text { DR Prepaid rent } & \$ 5000 & \text { CR Rent expense } & \$ 5000\end{array}$

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Definitions:

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets financed by its shareholders' equity.

Stockholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributable to shareholders.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period of time, indicating efficiency in inventory management.