AboutArthur Naman Expertise General accounting and bookkeeping questions. How to do monthly bookkeeping, how to prepare financial reports. How to reconcile accounts.
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Experience 30 years' experience doing tax and accounting work
Education/Credentials MPA from Univ. of Texas at Austin, MBA Golden Gate Univ, San Francisco CA
How do i treat a rent prepayment of 6,600.00 paid on the 18/08/2008 in my books
Answer When the rent is prepaid:
cash credit
prepaid rent debit
"Prepaid rent" is a short-term asset.
On a periodic basis, usually monthly, amortize the prepaid rent with the following transaction:
prepaid rent credit
rent expense debit
If this is a prepayment of the last month's rent, then this asset, prepaid rent, would just remain as an asset and not be expensed until the last month of the lease.
