Use the following information to answer this questions. Rent prepaid - 1/01/2014 - N600 Rent paid - 31/12/2014 - N3,000 Rent prepaid - 31/12/2014 - N400. Th...

Use the following information to answer this questions.

Rent prepaid - 1/01/2014 - N600
Rent paid - 31/12/2014 - N3,000
Rent prepaid - 31/12/2014 - N400.

The balance sheet as at 31st December 2014 will show

Answer Details

The balance sheet as at 31st December 2014 will show a current asset of N400. This is because the rent prepaid as at 1/01/2014 (N600) and the rent paid during the year (N3,000) are expenses for the period and have been fully accounted for in the income statement. The remaining rent prepaid as at 31/12/2014 (N400) is the only unexpired portion of the rent expense and therefore qualifies as a current asset.