On October 30, 2000, Sheller Manufacturing Company (whose fiscal period is a calendar year) paid six months’ rent in advance on its factory, at $10,000 a month.

Required: (1) Using T-accounts, record the payment of the rent and any other entry you think is appropriate in 2000.

(2) Show how the rent accounts would be reported on Sheller’s 2000 finan- cial statements.

(3) If Sheller had recorded the entire $60,000 as rent expense on October 31, 2000, what adjustment at the end of 2000 would you recommend to correct its accounting records? Why?

 TYK-1