BDA - Prepaid Rent Question

[shooterblitz]

Been doing some practice stuff for BDA's and came across this question.

Summary is, a business rents out part of their property to another business.
The rent agreement is for $1000 per month, which is paid 3 months in advance. The agreement is signed on 1st February 2013, meaning the 3 month advanced rent ($3000) is paid on 1st February 2013, for March, April, May, and carries on. The agreement commences on 1st March, and the business reports annually on 31st December.

How would we make a balance day adjustment for this situation at the end of December 2013 in the General Ledger account 'PREPAID RENT REVENUE'.

And how would this be reported in the Balance Sheet, Cash Flow Statement and Income Statement, as well as the amount at 31st December.

Any help would be appreciated! Cheers

[Kuroyuki]

Been doing some practice stuff for BDA's and came across this question.

Summary is, a business rents out part of their property to another business.
The rent agreement is for $1000 per month, which is paid 3 months in advance. The agreement is signed on 1st February 2013, meaning the 3 month advanced rent ($3000) is paid on 1st February 2013, for March, April, May, and carries on. The agreement commences on 1st March, and the business reports annually on 31st December.

How would we make a balance day adjustment for this situation at the end of December 2013 in the General Ledger account 'PREPAID RENT REVENUE'.

And how would this be reported in the Balance Sheet, Cash Flow Statement and Income Statement, as well as the amount at 31st December.

Any help would be appreciated! Cheers

ill try my best to answer the question so bear with me
It's March April may, June July August , September October November, December jan feb
Prepaid rent payments occur in feb, may, August, November and feb the next year again.
So total prepaid rent would be 12000 (3000*4) in 2013
Only 10 of the 12 months would be earned as of December 31 2013 (everything but jan and feb)
So the Bda would be
Debit Prepaid Rent Revenue 10000
Credit Rent Revenue 10000

On the balance sheet the remaining 2000 will be a current liability. And the 10000 Bda  will go towards OE.
On the cash flow statement there's only the prepaid rent revenue operating inflow of 12000
On the income statement there's rent revenue of 10000
Hope it's right and it's helps.