Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,100. Fragmental collected the entire $8,800 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

a. A debit to Cash and a credit to Rent Revenue for $8,800.

b. A debit to Unearned Rent and a credit to Rent Revenue for $3,300.

c. A debit to Unearned Rent and a credit to Rent Revenue for $5,500.

d. A debit to Rent Revenue and a credit to Unearned Rent for $3,300.

e. A debit to Rent Revenue and a credit to Cash for $3,300.

Question

Addie

Business

23 May, 23:29

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,100. Fragmental collected the entire $8,800 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

a. A debit to Cash and a credit to Rent Revenue for $8,800.

b. A debit to Unearned Rent and a credit to Rent Revenue for $3,300.

c. A debit to Unearned Rent and a credit to Rent Revenue for $5,500.

d. A debit to Rent Revenue and a credit to Unearned Rent for $3,300.

e. A debit to Rent Revenue and a credit to Cash for $3,300.

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Answers (1)

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Heather Hayden · Answer 1

Option B is correct one.

A debit to Unearned Rent and a credit to Rent Revenue for $3,300.

Explanation:

The adjusting entry made by Fragmental Co. on December 31 would be: A debit to Unearned Rent and a credit to Rent Revenue for $3,300.