What is adjusting entry?

The adjusting entry for December 31 is?

• Okay...so there is no prepaid rent account on the trial balance. There is only a rent expense account who's current balance is 9,750 (dr). I need an adjusting entry for the following: The Rent on the building is $750 per month. The rent for 2010 has been paid, as has that for January 2013. I thought I credit the Rent Expense account for 750 and debit/open a Prepaid Rent account for 750, but I am really not sure. Do I even need an adjusting entry for it? Any help would be appreciated I've been working on this problem for two days and can't seem to figure it out.

• Answer:

  I think you made a typo too. Instead of 2013, I think you mean 2011. 9,750 / 750 = 13 Months of rent was prepaid Instead of recording it as prepaid rent as it should have been, the whole amount was recorded as rent expense. After 12 months, there should be $750 in the Prepaid Rent account. You need to make an adjusting entry to reflect this. Dr Prepaid Rent 750 Cr Rent Expense 750