Concept:Rent paid in advance for future months is a prepaid expense, which is a current asset.
Explanation:The rent paid on 01/01/2018 is GH¢48,000.
The monthly rent is GH¢3,000.
So the advance covers
3,00048,000=16 months.
During the year, 12 months of rent are used up.
Rent consumed =
12×3,000=36,000.
Unused months =
16−12=4 months.
Prepaid rent at the end of the year =
4×3,000=12,000.
This prepaid amount is shown as a current asset.
Answer:Current asset of GH¢12,000.