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ABC Industries started their company and signed a new operating lease on April 1 of 2010. The company made the first yeara‚a„s lease payment of $40,000 on that date. The entire amount was recorded on April 1 as Prepaid Rent. Their fiscal year ends on December 31. ABC uses 80% of the rented facility for manufacturing and 20% for general and administrative activities. Between April 1 and December 31, ABC produced 5,000 finished products and sold 75% of them; the other 25% remain in Finished Goods Inventory at the end of the year. There is no work-in-process inventory at year-end. ABC made all of the appropriate adjusting journal entries at year-end. Required: Indicate how the $40,000 amount related to the cash lease payment made on April 1, 2010 should be reflected in the following accounts. If an account is unaffected you can leave that space blank or write a‚Å“0.a‚ Balance Sheet Income Statement Prepaid Rent Cost of Goods Sold Finished Goods Inventory SG&A Rent Expense

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