ABC Group (ABC), headquartered in Switzerland, is one of the world's largest engineering companies. ABC applies U.S. GAAP, and reports its results in millions of U.S. dollars. Based on ABC's financial reports for fiscal 2013, at January 1, 2013, ABC reported a balance in its Prepaid Rent account of $247 million; assume that this amount reflects its prepayments of rent on factory and office space

Question

for the next month. Assume also that on January 31, 2013, ABC paid $3,200 million as the annual rent for the period from February 1, 2013, to January 31, 2014 . ABC has a calendar year reporting period. Select the correct journal entries that ABC Group would make during January 2013 that affect the Prepaid Rent account.
a. Rent Expense $3,200 million
Cash $3,200 million

Prepaid Rent $247 million
Rent Expense $247 million
b. Rent Expense $3,200 million
Prepaid Rent $3,200 million

Prepaid Rent $247 million
Cash $247 million
c. Rent Expense $3,200 million
Prepaid Rent $3,200 million

Prepaid Rent $247 million
Cash $247 million
d. Rent Expense $247 million
Prepaid Rent $247 million

Prepaid Rent $3,200 million
Cash $3,200 million
e. none of the above

Answer 1

D