Use the following information to answer this question GH¢ Monthly rent payable 3,000 Rent paid on 01/01/2018 48,000 The balance of rent in the balance sheet...

Use the following information to answer this question
                                                    GH¢
Monthly rent payable                  3,000
Rent paid on 01/01/2018          48,000

The balance of rent in the balance sheet would be

Answer Details

The balance of rent in the balance sheet would be a current liability of GH¢12,000. A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It lists the company's assets, liabilities, and equity. In this case, the monthly rent payable is GH¢3,000. The rent paid on 01/01/2018 is GH¢48,000, which is more than the monthly rent for a whole year (12 x GH¢3,000 = GH¢36,000). This means that the company has a surplus of GH¢12,000 (GH¢48,000 - GH¢36,000). Since the company has not yet used the GH¢12,000 to pay for its rent, it is considered a liability, or an obligation to pay in the future. In accounting, a liability is recorded as a current liability if it is expected to be paid within one year. Therefore, the balance of rent in the balance sheet would be a current liability of GH¢12,000.