On June 1, 2019, an advance rent payment of $8,400, representing a four-month prepayment for the...
On June 1, 2019, an advance rent payment of $8,400, representing a four-month prepayment for the months of June, July, August, and September, was received in cash from the company’s tenant.
The adjusting entry that will be made at the end of each month to show the amount of rent “earned” during the month is:
a. Dr.Unearned Rent Revenue 2,100/ Cr.Rent Revenue 2,100
b. Dr.Cash 2,100 /Cr.Rent Revenue 2,100
c. Dr.Unearned Rent Revenue 6,300/ Cr.Rent Revenue 6,300
d. Dr.Cash 8,400 / Cr.Unearned Rent Revenue 8,400
Homework Answers
Answer
- When $ 8400 advance rent was received for 4 months, the
following entry would have been recorded:
[Debit] Cash $ 8400
[Credit] Unearned Rent Revenue $ 8400 - This $ 8400 represents rent FOUR month’s rent.
One month rent = $ 8400 / 4 = $ 2100 - To record this monthly earned rent following entry will be
recorded as an ‘adjusting’ entry:
[Debit] Unearned Rent Revenue $ 2100
[Credit] Rent Revenue $ 2100 - Correct Answer = Option ‘A’
Dr.Unearned Rent Revenue 2,100/ Cr.Rent Revenue 2,100
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On June 1, 2019, an advance rent payment of $8,400, representing
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