Journal entries for prepaid rent ABB Group (ABB), headquartered in Switzerland, is one of the world’s largest engineering companies. ABB applies U.S. GAAP, and reports its results in millions of U.S, dollars. Based on ABB’s financial reports for fiscal 2007, at January 1, 2007, ABA reported a balance in its Prepaid Rent account of $247 million; assume that this amount reflects its prepayments of rent on factory and office space for the next month. Assume also that on January 31, 2007, ABB paid $3,200 million as the annual rent for the period from February 1, 2007, to January 31, 2008. ABR has a calendar year reporting period.

a. Provide the journal entries that ABB Group would make during January 2007 that affect the Prepaid Rent account.

b. Provide the journal entry that ABB Group would make at the end of 2007 that affects the Prepaid Rent account.