Problem 1: On January 1, Year 4, Eugene Company had a proper balance in Prepaid Rent of $1,700. The firm only has one rented property and the lease on that property expired on March 31, Year 4. The firm had paid $13,600 on March 31, Year 2, for the two-year lease starting on that date. On March 31, year 4, the firm paid $15,600 for a new two year lease starting on the same date. The firm has unadjusted balances in its Rent Expenses account and Prepaid Rent accounts on December 31, year 4, of $15,600 and $1,700, respectively.
Required: Show the proper adjusting journal entry at December 31, Year 4, the end of Eugene's fiscal year.