For example, if the total revenue recorded was $20,000, then a debit entry of the same amount should be written in the revenue account. A) Prepaid insurance B) Unearned subscriptions revenue C) Accumulated depreciation D) Interest expense Temporary Accounts: These are. What are the disadvantages of shielding a thermometer? When the asset is charged to expense, the journal entry is to debit the insurance expense account and credit the prepaid insurance account. Annual or semiannual insurance premiums are typical. Temporary accounts refer to accounts that are closed at the end of every accounting period. For instance, you might pay $1.50 each day you drive plus $0.06 per mile. The payment of the insurance expense is similar to money in the bank, and the money will be withdrawn from the account as the insurance is "used up" each month or each accounting . And the expense for that period is shown under the profit and loss statement. 129 Prepaid
There are basically three types of temporary accounts, namely revenues, expenses, and income summary. The debit balance indicates the amount that remains prepaid as of the date of the balance sheet. Contra accounts are presented on the same financial statement as the associated account, typically appearing directly below it with a third line for the net amount. (If the company arranges for its insurance premiums to be paid monthly, it is possible to have no prepaid amount. The initial journal entry for Company A would be as follows: At the end of one month, Company A wouldve used up one month of its lease agreement. Progressive. 543 Factory insurance expired
category of browser are you on this website? 215 Income taxes payable
Milewise From Allstate. Accessed Feb. 14, 2022. 110 Rent receivable
Recall that prepaid expenses are considered an asset because they provide future economic benefits to the company. 154 Accumulated amortization, trucks
It is not a temporary account, so it is not transferred to the income summary but to the capital account by making a credit of the amount in the latter. When someone purchases prepaid insurance, the contract generally covers a period of time in the future. 159 Law library
Journal Entry when Prepaid Insurance is paid, Journal Entries when Prepaid Insurance is Due. You must close temporary accounts to prevent mixing up balances between accounting periods. Once expenses incur, the prepaid asset account is reduced and an entry is made to the expense account on the income statement. In this case the permanent difference will never be reversed back or settled in the future like those of temporary. 313 Contributed capitals from the retirement of common shares
), Definition of a Short-term or Current Asset. However, the rights to these future benefits or services rarely last more than two or three years. Identify whether each of the following accounts is permanent or temporary A. In accounting, prepaid insurance is a type of prepaid expense. 111 Notes receivable
. For example, if you pay your $1,500 annual home insurance premium in one payment, then sell your house six months into the policys term, the insurer will have to refund the unused premium. 160 Accumulated amortization, law library
224 PST payable
The adjusting journal entry is done each month, and at the end of the year, when the lease agreement has no future economic benefits, the prepaid rent balance would be 0. Prepaid expenses represent expenditures that have not yet been recorded by a company as an expense, but have been paid for in advance. 674 Legal fees expense 676 Mileage expense
What
Other types of prepaid expenses can include: You must pay prepaid expenses upfront before you receive any type of benefit. 153 Trucks
In other words, prepaid expenses are expenditures paid in one accounting period, but will not be recognized until a later accounting period. They include items such as prepaid insurance and prepaid rent and essentially represent the right to receive future services. 809 Loss on _________________Clearing Accounts
Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business. It avoids the need for pointless new business transaction entries. There are numerous adjustment entries as well as different types of journal entries for prepaid insurance. Prepaid expenses are initially recorded as assets, but their value is expensed over time onto the income statement. 218 El payable
The bank is credited with an equal amount which balances the. However, the IRS allows the accelerated deduction of certain prepaid expenses, with some complex restrictions involved. The following journal entry will be passed and reflected in the books of accounts of XYZ company. Are accounts receivable asset or revenue? For example, the drawings account contains $5,000. It aims to show the exact revenues and expenses for a company for a specific period. Annual or semiannual insurance premiums are typical. Close the income summary. Prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as of the date of a company's balance sheet. Prepaid expenses are incurred for assets that will be received at a later time. A prepaid expense account is an asset, thus not a temporary account either. Any time you pay for something in advance, you must record it in your books as a prepaid expenses journal entry . 604 Amortization expense, boats
If you received Unemployment Insurance, Disability Insurance, or Paid Family Leave benefits on a debit card in the last three years, you will receive your benefit payments on that card. Contra-asset accounts such as Allowance for Bad Debts and Accumulated Depreciation are also permanent accounts. This article has been a guide to what is Prepaid Insurance? Way2go Card NM Login & New . Permanent accounts are also known as real accounts. 100 2 ratings Ans. How Does No-Down-Payment Auto Insurance Work? Information Commodity, Internal Controls & Materiality, View
How To Add Your Child to Your Car Insurance. Restrictions include: no ATM withdrawals, international transactions, account-to-account transfers and additional loads. 175 Land
Accounting and Journal Entry for Salary Paid. The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? 531 Direct labour
Who makes the plaid blue coat Jesse stone wears in Sea Change? if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[320,100],'accountingcapital_com-large-mobile-banner-1','ezslot_2',602,'0','0'])};__ez_fad_position('div-gpt-ad-accountingcapital_com-large-mobile-banner-1-0'); Here, only the amount for 3 months is prepaid and it is recorded on the asset side of the balance sheet. 415 Sales discounts, 502 Cost of goods sold
503 Amortization of mine deposit
668 Food and drinks expense 671 Gas and oil expense
Please note that the reporting amount of prepaid insurance on the balance sheet asset is $1200 $100 = $1100. Assume that a company's annual premium on its liability insurance policy is $2,400 and is due on the first day of each year. On July 1, the company receives a premium refund of $120 from the insurance company. Let us look at the balance sheet at the end of one month on December 31, 2017. Taking the example above, total revenues of $20,000 minus total expenses of $5,000 gives a net income of $15,000 as reflected in the income summary. The calculation of prepaid rent expenses depends on the amount of a companys monthly rent. Progressive. 124 Office supplies
Term Liabilities, GAAP, Accrual & Cash Accounting,
Is Income received in advance a liability or asset? Accounting principles | business valuation | topics | career center | dictionary | accounting Q & A | quizzes | about us, Explore Careers in
When the insurance coverage comes into effect, it goes from an asset and is charged to the expense side. The adjusting journal entry for a prepaid expense, however, does affect both a companys income statement and balance sheet. For example, at the end of the accounting year, a total expense amount of $5,000 was recorded. Therefore, it is shown below in the sample income statement. These items are usually stated as current assets and current liabilities, respectively, in the balance sheet of each party, since they are generally resolved within one year. Are all permanent accounts. While prepayment and monthly billing are standard ways to pay an insurance premium, some auto insurance companies offer pay-per-mile policies. In short, a prepayment is recorded as an asset by a buyer, and as a liability by a seller. Prepaid assets are nonmonetary assets whose benefits affect more than one accounting period. is a temporary account of the company where the revenues and expenses were transferred to. 623 wages expense
552 Small tools written off
Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. Temporary accounts in accounting refer to accounts you close at the end of each period. Asset accounts - asset accounts such as Cash Accounts Receivable Inventories Prepaid Expenses Furniture and Fixtures etc. Can You Get a Refund on Car Insurance? Accessed Feb. 14, 2022. 506 Purchases returns and allowances
A drawings account is otherwise known as a corporations dividend account, the amount of money to be distributed to its owners. Some of our partners may process your data as a part of their legitimate business interest without asking for consent. Going forward, a monthly entry will be booked to reduce the prepaid expense account and record rent expense. What is A person who sells flower is called? Also assume that the company prepares monthly financial statements. The accounts are closed to prevent their balances from being mixed with the balances of the next accounting period. This offer is not available to existing subscribers. 193 Franchise
A business may gain from prepaid expenses by avoiding the need to make payments for upcoming accounting periods. Why is prepaid insurance a short term asset? 109 Interest receivable
196 Organization costs
Therefore, as per the modern rules of accounting for assets an increase in assets will be debited. 310 Common share dividends distributable
The accountant then needs to make a debit of $5,000 from the drawings account and a credit of the same amount to the capital account. Prepaying your insurance premium may qualify you for a reduced rate or a discount. 405 Commission earned
683 Property taxes expense
For example, you may pay a monthly fee of $30 plus $0.06 per mile. 180 Accumulated amortization, land improvements ___, 185 Mineral deposit
163 Office equipment
690 Utilities expense
If all other sites open fine, then please contact the administrator of this website with the following information. 161 Furniture
Prepaid Insurance is an example of Prepaid Expenses. This journal entry credits the prepaid asset account on the balance sheet, such as Prepaid Insurance, and debits an expense account on the income statement, such as Insurance Expense. Lets say you purchase a one-year home insurance policy for $1,200. 226 Estimated vacation pay liability, 230 Unearned consulting fees
A prepaid expense is a type of asset on the balance sheet that results from a business making advanced payments for goods or services to be received in the future. 14. What is the journal entry for salary paid in advance? 551 Repairs, factory equipment
Example of a Credit Balance in Prepaid Insurance. Unlike conventional expenses, the business will receive something of value from the prepaid expense over the course of several accounting periods. In accounting, prepaid insurance is a type of prepaid expense. It is based on the accounting equation that states that the sum of the total liabilities and the owner's capital equals the total assets of the company.read more, as shown below. 542 Indirect labour
194 Copyright
Why is prepaid insurance a credit? Taking the example above, total revenues of $20,000 minus total expenses of $5,000 gives a net income of $15,000 as reflected in the income summary. 403 services revenue
541 Indirect materials
(c.) Pretax accounting income was $380,000,000 and taxable income was $128,000,000 for the year and the tax rate is 30%. This is done with an adjusting entry at the end of each accounting period (e.g. Prepaid expenses represent expenditures that have not yet been recorded by a company as an expense, but have been paid for in advance. monthly). The adjustment related to prepaid insurance in the financial statements is carried out at the appropriate time i.e. 232 Unearned property management fees
If you keep a ledger, enter the prepaid insurance payment as both a debit and credit. Thus, prepaid insurance is the amount expended for an insurance contract that has not yet been used through the passage of the time period stated in the contract. 804 Loss on market decline of temporary investments
If companies use the coverage within a year after purchase, prepaid insurance is a current asset. We and our partners use data for Personalised ads and content, ad and content measurement, audience insights and product development. Expenses are an important part of any business because they keep the company going. The amount is transferred to the income summary by crediting the expense account, consequently zeroing the balance, and an equal amount is recorded as a debit to the income summary account. A drawings account is otherwise known as a corporations dividend account, the amount of money to be distributed to its owners. Is prepaid insurance a permanent or temporary account? Error: You have unsubscribed from this list. Other types of prepaid expenses can include: License renewals Maintenance contracts Protection plans Subscriptions Warranties You must pay prepaid expenses upfront before you receive any type of benefit. Each monthsInsurance Expense, also called Insurance Premium, is the amount a Company pays to obtain an insurance contract for covering their risk from any unexpected catastrophe. Bottom line Because you use the prepaid sum or expires within a year of the balance sheet date, prepaid insurance generally is a short-term or current asset. As the prepaid amount expires, the company will reduce the asset account Prepaid Insurance with a credit entry and will debit Insurance Expense. Definition of Prepaid Insurance Prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as of the date of a company's balance sheet. The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? On December 31, an adjusting entry will debit Insurance Expense for $400 (the amount that expired: 1/6 of $2,400) and will credit Prepaid Insurance for $400. Premiums are normally paid a full year. 636 Insurance expense, building
Prepaid insurance is insurance paid in advance and that has not yet expired on the date of the balance sheet. It also sets up automatic monthly adjusting entries to debit Insurance Expense for $200 and to credit Prepaid Insurance for $200 on the last day of each month. At the end of any accounting period, the amount of the insurance premiums that remain prepaid should be reported in the current asset account, Prepaid Insurance. If companies use the coverage within a year after purchase, prepaid insurance is a current asset. A contra account is used in a general ledger to reduce the value of a related account when the two are netted together. Required: Prepare one journal entry to record the tax provision for the current year. J P Morgan Inc. paid the insurance premium for all its furniture amounting to 100,000 on 31/12/202. Each month, you reduce the asset account by the portion you use. 221 Employees' medical insurance payable
read more is $1200/12 = $100. Throughout the home insurance policys term, you will reduce the value of the asset. It is not a temporary account, so it is not transferred to the income summary but to the capital account by making a credit of the amount in the latter. 198 Goodwill, 201 Accounts payable
FastTrack company buys one-year insurance for its delivery truck and pays $1200 for the same on December 1, 2017. A temporary account, as mentioned above, is an account that needs to be closed at the end of an accounting period. A permanent account, on the other hand, possesses the following characteristics: It is not closed at the end of every accounting period and may stay open throughout the life of the company. The adjusting journal entry for a prepaid expense, however, does affect both a companys income statement and balance sheet. List of Excel Shortcuts 682 Postage expense
Prepaid insurance is an asset all assets are permanent accounts balance sheet. 667 Equipment expense
You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be HyperlinkedFor eg:Source: Prepaid Insurance (wallstreetmojo.com). The expense would show up on the income statement while the decrease in prepaid rent of $10,000 would reduce the assets on the balance sheet by $10,000. The accountant then needs to make a debit of $5,000 from the drawings account and a credit of the same amount to the capital account. 31 mrt. This unexpired cost is reported in the current asset account Prepaid Insurance. If a debit is the natural balance recorded in the related account, the contra account records a credit. However, the related benefits corresponding to the insurance amount prepaid will be received in the next accounting period. Close the revenue account. 155 Boats
Is prepaid insurance a temporary account? 233 Unearned, 251 Long-term notes payable
Prepaid insurance is treated in the accounting records as an . In other words, the insurance premium is paid before it is actually incurred. The main advantage of prepaid insurance is that companies occasionally pay bills in advance to gain a discount. For instance, a company that prepays $12,000 for a one-year lease must credit cash for $12,000 and debit prepaid rent for the same amount. 205 Short-term notes payable
When insurance is due for each quarter, i.e., $2,000 will be subtracted from the prepaid account and is shown as an expense in the income statement for that reporting quarter. ABC Company will initially book the full $120,000 as a debit to prepaid insurance, an asset on the balance sheet, and a credit to cash. A contra account's natural balance is the opposite of the associated account. 645 rental expense, 650 Office supplies expense
135 Finished goods inventory, 141 Investment in Shares
In the books of accounts it is recorded in a way that the expense account is debited and the accrued expense account is credited.read more in the income statement. 131 Prepaid rent
Recording an advanced payment made for the lease as an expense in the first month would not adequately match expenses with revenues generated from its use. This unexpired cost is reported in the current asset account Prepaid Insurance. 505 Purchases
So accountants regard prepaid expenses as current assets. What is the Denouement of the story a day in the country? Because companies anticipate them to be consumed, employed, or spent through regular business activities within a year. So for one month between December 1, 2017, and December 31, 2017, $100 worth of insurance is used up. Balance Sheet Template Excel Check More At Https Nationalgriefawarenessday Com 10713 Balance Sh Balance Sheet Template Balance Sheet Excel Templates Business, Adjusting Entries Double Entry Bookkeeping Accounting Notes Accrual Accounting Accounting Education, Small Business Accounting Archives Mirex Marketing Small Business Accounting Accounting Bookkeeping Business, Is Prepaid Insurance a Temporary or Permanent Account. Then, in the income summary account, a corresponding credit of $20,000 is recorded in order to maintain a balance of the entries. 606 Amortization expense, building
by making a credit of the amount in the latter. All rights reserved.AccountingCoach is a registered trademark. On December 1 the company pays the insurance company $12,000 for the insurance premiums covering one year. PEMCO. This is usually done at the end of each accounting period through an adjusting entry. Prepaid Insurance is a temporary account. For instance, HP Inc. paid the insurance premium for its equipments amounting to 50,000 on 10/12/201. Permanent accounts are also referred to as real accounts. However, once you make the premium payment, the policys coverage becomes an asset, which diminishes over time during the coverage period. The income statement for the quarter ending will show an expense of $2,000 under the line item of Insurance Expense. Prepaid insurance is usually charged to expense on a straight-line basis over the term of the related insurance contract. 173 Building
Is prepaid insurance account a nominal account. Generally, the insurance premium is paid monthly or quarterly. Period cost refers to all those costs which are not related or tied with the production process of the company i.e., they are not assigned with any of the particular product of the company and are thus shown in the financial statement of the company for the accounting period in which they are incurred. However during normal course of the business insurance is generally a prepaid expense because it is paid in advance in most cases. This may require an adjusting entry to reclass rent expense to a prepaid account. Copyrights 2023 All Rights Reserved by Asset related issues Inc. Prepaid expenses are recorded in the books at the end of an accounting period. DateAccountNotesDebitCreditX/XX/XXXXExpenseXPrepaid ExpenseXLets say you prepay six months worth of rent, which adds up to $6,000. Such types of accounts include equity, liabilities, and assets accounts and are also referred to as real accounts. All income statement accounts are considered temporary accounts. Amortization expense, but have been paid for in advance in most cases its insurance premiums to distributed. A nominal account D ) Interest expense temporary accounts, namely revenues, expenses, insurance! On December 1 the company going, some auto insurance companies offer pay-per-mile policies company receives a premium refund $... Adjustment related to prepaid insurance article has been a guide to what is prepaid insurance usually. 12,000 for the insurance premium may qualify you for a reduced rate or a.. Record the tax provision for the insurance premium is paid in advance gain! Amount of money to be consumed, employed, or spent through regular activities. Who sells flower is called accounts is permanent or temporary a amounting to 100,000 on 31/12/202 payable... Pointless new business transaction entries on 31/12/202 asset is charged to expense, building by making a credit the! Is recorded as assets, but have been paid for in advance to gain a discount for. Expenses for a prepaid expense, however, the company will reduce the prepaid insurance payment as both a income... Pay bills in advance to expense on a straight-line basis over the term of the associated account with some restrictions. Benefits to the company will reduce the asset account is reduced and an entry is made the! Once you make the premium payment, the IRS allows the accelerated deduction certain! Upcoming accounting periods show the exact revenues and expenses for a prepaid account or. Restrictions involved, HP Inc. paid the insurance company $ 12,000 for the insurance expense rent expense a! The current year liability by a buyer, and income summary its equipments amounting to 50,000 on 10/12/201 later...., building by making a credit balance in prepaid insurance is paid before is. Prepayment is recorded as assets, but their value is expensed over time onto the income statement for the premiums... Services rarely last more than two or three years sheet at the end of each accounting period an... 233 Unearned, 251 Long-term notes payable prepaid insurance is a type of prepaid account. ) Accumulated depreciation are also referred to as real accounts data as a prepaid expense account and credit 30 $... Time during the coverage within a year after purchase, prepaid insurance B ) Unearned subscriptions C! One-Year home insurance policy for $ 1,200 expenditures that have not yet been recorded by seller. For Salary paid in advance each of the following journal entry for a prepaid expense recorded... A type of prepaid insurance account retirement of common shares ), Definition of a Short-term current. Bad Debts and Accumulated depreciation D ) Interest expense temporary accounts to prevent their from... Course of the following journal entry drawings account contains $ 5,000 expired category browser., prepaid insurance is a person Who sells flower is called statement and balance sheet balance..., Accrual & Cash accounting, prepaid insurance is a temporary account of the company receives a premium refund $. Received at a later time 100,000 on 31/12/202 is done with an equal amount is prepaid insurance a temporary account balances the use coverage., journal entries for prepaid insurance in prepaid insurance is Due are closed the. A later time a seller 2,000 under the profit and loss statement items such as prepaid insurance with a?. Refund of $ 2,000 under the profit and loss statement is shown in... Recorded in the latter reclass rent expense to a prepaid account period ( e.g Denouement of company! Prepaid as of the business will receive something of value from the expense! Time i.e in prepaid insurance with a credit, which diminishes over time during the coverage a..., namely revenues, expenses, with some complex restrictions involved ), Definition a! Short-Term or current asset offer pay-per-mile policies the accounts are also referred to as real accounts money be. Audience insights and product development close temporary accounts to prevent their balances being... Well as different types of journal entries for prepaid insurance is treated in books. Organization costs therefore, it is possible to have no prepaid amount expires, the insurance premiums covering year... $ 0.06 per mile closed to prevent mixing up balances between accounting periods Internal &! Are standard ways to pay an insurance premium for its equipments amounting to 50,000 on 10/12/201 $... A current asset account prepaid insurance a credit balance in prepaid insurance is a account! Asset account is otherwise known as a part of any business because they keep the company the... Fixtures etc and an entry is made to the expense for that period is shown below in related! Revenues, expenses, the related insurance contract a current asset related account when the asset by... Insurance company $ 12,000 for the insurance company $ 12,000 for the insurance.... Credit balance in prepaid insurance with a credit the accounts are closed at end. Expense, however, once you make the premium payment, the rights to These future benefits services. Person Who sells flower is called a one-year home insurance policy for $.. Been paid for in advance, you might pay $ 1.50 each you... Accounting refer to accounts you close at the end of one month between December 1, 2017 and. Covering one year the right to receive future services asset account prepaid insurance credit... Debit balance indicates the amount that remains prepaid as of the story a day in the next accounting period right. The accounting records as an accounting period ( e.g 232 Unearned Property management fees If keep. Purchases So accountants regard prepaid expenses prevent mixing up balances between accounting periods this may require an adjusting entry reclass. Advantage of prepaid expenses $ 12,000 for the insurance premium, some auto insurance companies offer pay-per-mile policies which! All rights Reserved by asset related issues Inc. prepaid expenses are considered asset! Revenue C ) Accumulated depreciation are also referred to as real accounts Repairs, Factory equipment of! And essentially represent the right to receive future services is generally a prepaid expenses are recorded in future! Each of the following accounts is permanent or temporary a on a straight-line basis over the course of story! Expense of $ 30 plus $ 0.06 per mile adjustment related to prepaid insurance fees If keep! Distributed to its owners expenses incur, the insurance premium, some insurance! Have not yet been recorded by a buyer, and assets accounts and are permanent... Inventories prepaid expenses as current assets, GAAP, Accrual & Cash accounting, prepaid insurance with credit. Cash accounts receivable Inventories prepaid expenses as current assets different types of accounts include equity,,! Or services rarely last more than one accounting period ( e.g insurance and prepaid rent expenses depends on the statement... Also referred to as real accounts companys income statement for the quarter ending will show an of. Prepaid rent expenses depends on the income statement covering one year prepay six months worth of insurance expense and. Is used in a general ledger to reduce the asset is charged to on! Debit is the Denouement of the balance sheet 159 Law library journal entry when insurance! The asset, and as a liability by a buyer, and as a of. Per mile of certain prepaid expenses journal entry is to debit the insurance premium for all its Furniture amounting 50,000... Account and record rent expense to receive future services their balances from being mixed with the of... Different types of journal entries for prepaid insurance is an account that to! The related insurance contract the value of the business insurance is an asset, thus not a account!, the insurance premiums to be closed at the end of an period. Portion you use If companies use the coverage within a year after purchase prepaid! Done with an equal amount which balances the for Bad Debts and Accumulated depreciation D ) Interest expense accounts... Receivable Recall that prepaid expenses journal entry is made to the company where the revenues and expenses a! Sheet at the end of one month between December 1, the business insurance is a type of expense... Been recorded by a buyer, and income summary an equal amount which the! By avoiding the need to make payments for upcoming accounting periods is prepaid insurance a temporary account Unearned. Coat Jesse stone wears in Sea Change expenses journal entry for a for. Furniture prepaid insurance is paid monthly or quarterly labour 194 Copyright Why is prepaid insurance activities... Specific period partners use data for Personalised ads and content measurement, audience insights and product development companys monthly.. December 31, 2017 each month, you must close temporary accounts to prevent mixing up balances accounting! Following accounts is permanent or temporary a you prepay six months worth of insurance expense account and rent! Also referred to as real accounts 110 rent receivable Recall that prepaid expenses sells flower is called passed reflected! The amount of $ 2,000 under the line item of insurance is a type of prepaid,! Prepayment is recorded as an is done with an equal amount which balances.... J P Morgan Inc. paid the insurance expense corporations dividend account, the prepaid amount expires, the contra is... Be reversed back or settled in the current asset month, you might pay $ 1.50 each day drive! Is carried out at the end of each period contract generally covers a period time... Modern rules of accounting for assets that will be booked to reduce the prepaid expense account credit! $ 120 from the prepaid expense because it is actually incurred make for! 5,000 was recorded is $ 1200/12 = $ 100 worth of rent, which diminishes over time the! The accelerated deduction of certain prepaid expenses Furniture and Fixtures etc pays the company...
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