Question

What is journal entry for out of rent paid this year 5000 is related to next year

Answer 1

Prepaid Rent  A/C        Dr    Rs.5000

         To Rent A/C     Rs.5000

(Being Rs.5000 of rent paid is related to next year)

Answer 2

3 golden rules

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

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Prepaid expense is expense paid in advance but which has not yet been incurred. Expense must be recorded in the accounting period in which it is incurred.

reason for debit and credit

Prepaid rent A/c -Nominal A/c ,prepaid rent should be  recognize an asset in respect of expense it has paid in advance . it is to be debited

Cash A/c - real A/c , where money goes out of the business therefore its credited

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Journal entry

Prepaid rent A/c    Dr  5000

           To Cash A/c                   5000

(being rent paid in advance )