We prepaid January's rent in December for tax purposes. After implementing 842, we want to properly account for this prepayment. The prepayment hit our checking account in December. I know we have to use the ROU asset instead of the Prepaid account for any journal entries. I wanted some guidance from anyone who has journaled prepayment of rent in this way. Thanks!
If rent was prepaid, you should have a prepaid asset account. Credit the prepaid rent asset account instead of cash on the journal entry. Otherwise, the entry is the same as any other month. The accumulated amortization - ROU asset (credit) is offset by the liability reduction (debit) and the prepaid rent expense asset (credit) is offset by the Lease expense (debit). The issue arises if you posted the December payment to Lease expense.
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