Suppose Hoosiers, a specialty clothing store, rents space at a local mall for one year, paying $22,800 ($1,900/month) in advance on October 1.

1.Record the payment of rent in advance on October 1.

2.Record the adjusting entry for rent used till December 31.

3. Calculate the year-end adjusted balances of prepaid rent and rent expense (assuming the balance of Prepaid Rent at the beginning of the year is $0).