Saturday, October 10, 2020

On July 1, 2021, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its warehouse. What would be the amount of rent expense in the 2022 financial statements for Rents-A-Lot under both cash-basis and accrual-basis accounting?

On July 1, 2021, Rents-A-Lot Inc. paid $72,000 for 36 months of advance rent on its warehouse. What would be the amount of rent expense in the 2022 financial statements for Rents-A-Lot under both cash-basis and accrual-basis accounting?


A) Cash-basis = $24,000; Accrual-basis = $24,000.

B) Cash-basis = $72,000; Accrual-basis = $12,000.

C) Cash-basis = $0; Accrual-basis = $24,000.

D) Cash-basis = $0; Accrual-basis = $12,000.


Answer: C

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