Swifty Corporation paid cash of $159000 on June 1, 2020 for one year’s rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2020 adjusting entry is

The correct adjusting entry is a credit to prepaid rent for half the value of the cash that was paid out on June, because by December, six months will have passed. And a debit to rent expense is made for the same value.

The adjusting journal entry is:

Account                    Debit          Credit

Prepaid Rent                              $79,500

Rent Expense         $79,500

Their underlying asset beta is closest to is 1.08

Explanation:

According to the given data we have the following:

Debt is given as $78 billion

Equity is given as $142 billion

equity beta given as 1.68

Therefore, in order to calculate the underlying asset beta we would have to use the formula of the the equity beta for a levered firm as follows:

betaE =beta A [1 + (Debt / Equity)]

1.68 = \beta A [1 + ($78 B/ $142 B)]

1.68 = \beta A [1 + 0.5493]

betaA = 1.68 / 1.5493

betaA = 1.08

Their underlying asset beta is closest to is 1.08