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Prepaid Rent is an asset, therefore to decrease the asset (or use up the rent) a decrease would be a credit. Assets generally maintain a debit balance, which means to increase the balance we debit and to decrease the balance we credit.
[Debit] Prepaid Rent xxxx [Credit] Cash / bank xxxx
1. [Debit] Prepaid Rent xxxx [Credit] Cash xxxx
Debit prepaid rent and credit cash.
I say it is a debit
Prepaid Rent is an asset, therefore to decrease the asset (or use up the rent) a decrease would be a credit. Assets generally maintain a debit balance, which means to increase the balance we debit and to decrease the balance we credit.
. Credit
[Debit] Prepaid Rent xxxx [Credit] Cash / bank xxxx
Debit Cash for the cash received, and credit a liability account you can call Prepaid Rent or Prepaid Deposits. Basically, you credit a liability account because you "owe" them the rent for the month they have paid for in advance. Once the month has passed, you can debit the Prepaid Rent and credit Rental Income. Or, if the prepaid rent is a deposit made, you just keep it on your books as a liability until the end of their lease, at which time they will either be refunded the deposit (debit Prepaid Rent, credit Cash) or if they don't pay their last month's rent you can use the deposit (debit Prepaid Rent, credit Rental Income).
1. [Debit] Prepaid Rent xxxx [Credit] Cash xxxx
Debit prepaid rent and credit cash.
I say it is a debit
prepaid rent is rent paid before it is due so it is current assets because it's benefit will be taken in future.
Rent expense has a debit balance as a normal balance so increase in rent will be shown by debit to rent expense.
Prepaid rent A/c Dr To, Rent A/C
Payer: debit prepaid rent and credit cash. Remember the accrual basis of accounting. After using rent for one month. Then the payer debits rent expense and credits prepaid rent.
Prepaid Rent ( debit ) Cash ( credit )