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Hi guys, this is actually a work situation, but is relevant to p2 and i’d appreciate your help.
I have a client that posted an advance paid on rent as a liability, but it needs to be reclassified to an asset. (I am a trainee auditor). I’m having difficulty with the double entry, i know that i have to debit the liability, but what is the corresponding credit entry?
Thanks in advance
Normally when you make the advance payment you have to
Debit prepaid
credit cashWhen you consume/recognize the expense
you will debit rent expense
credit prepaid
So in you case if say “i know the debit is liability”I want to know what was the debit entry when the payment made i.e.
prepaid liability credit was made but what was the debit entry??
If you you tale me that i will tale you what to do!!!
Bizuayehu
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