On June 1 of Year 1, a company paid $2,400 cash to rent office space for one year beginning immediately. Based solely on this in

Question

1 year ago

10

On June 1 of Year 1, a company paid $2,400 cash to rent office space for one year beginning immediately. Based solely on this in

formation, how this transaction would affect the Year 2 financial statements? Assume that the company's accounting year is same as the calender year. (Select all that apply.)

Business

1 answer:

Neporo4naja [7] · Answer 1 · 2023-03-04T18:58:25+03:00

With an assumption that the company's accounting year is same as the calender year, the income statement would show $1,000 of rent expense.

<h3>What is an income statement?</h3>

An income statement refers to a financial statement that shows a firm's income and expenditures for an accounting year.

Rent expenses = $2,400 prepaid rent / 12 months

Rent expenses = $200 per month

Rent expenses = $200 rent expense per month x 5 months (in Year 2)

Rent expenses = $1,000 rent expense

In conclusion, with an assumption that the company's accounting year is same as the calendar year, the income statement would show $1,000 of rent expense.