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Unformatted text preview: saction: Paying rent in advance, so amount paid a future economic benefit (for next two
months). Asset is increasing (Prepaid Rent) and Asset is decreasing (Cash).
Rules: Increases to assets are debited, decreases to assets are credited.
Journal entry: Debit to Prepaid Rent, Credit to Cash Jan 2 Prepaid Rent
800 Post to the general ledger: 4. Prepaid Rent Cash 1/2 800 1/110,000 January 4: Purchases office equipment from Staples for $1500. Pays $750 now, and agrees to pay
$750 by February f t
. 1. 2.
3. Transaction: Buying equipment, and making a partial payment. Equipment will have future
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