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The adjusting entry would be Debit rent expenses and credit prepaid rent by $1,037.
Adjusting journal entries are being used to report transactions that occurred but were not correctly documented using the accrual method of accounting.
There at end of an accounting period, the adjusting journal entries are filed in a company's general ledger to comply with the matching and revenue recognition standards.
The most common types of journal entry changes are accruals, deferrals, and estimates. It is used for accrual accounting reasons when one accounting period finishes and another begins..
That instance, rent expenditure for December must be acknowledged; the entry would be as follows.
DR Rent Expense =12444/12
= $1,037
CR prepaid rent $1,037
To know more about adjusting entries click here:
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