On June 1st Team Snap paid 54000 to NYC Realty for 12 months

On June 1st Team Snap paid $54,000 to NYC Realty for 12 months of rent beginning June 1st. The company correctly records the transaction on June 1. What accounts will be affected as a result of this payment?

A. Cash and Retained Earnings B. Cash and Rent Payable C. Cash and Rent Expense D. Cash & Prepaid Rent

Solution

Entry of the same will be pass as below,

Prepaid Rent Debit - $ 54,000

To Cash Credit $ 54,000

So as per the above,

Answer = Option D = Cash & Prepaid Rent