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23 May, 10:40

Bonita Realty Management Co. received a check for $30,000 on October 1, which represents a one yearadvance payment of rent on an office it rents to a client. Unearned Rental Revenue was credited for the full $30,000. Financial statements are prepared on December 31. The appropriate adjusting journal entryto make on December 31 would be

A. Rent Revenue $2,500Unearned Rent Revenue $2,500

B. Rent Revenue $22,500Unearned Rent Revenue $22,500

C. Unearned Rent Revenue $22,500Rent Revenue $22,500

D. Unearned Rent Revenue $7,500Rent Revenue $7,500

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Answers (1)
  1. 23 May, 10:49
    0
    D. Unearned Rent Revenue $7,500 Rent Revenue $7,500

    Explanation:

    The journal entry is shown below:

    Unearned Rent Revenue Dr $7,500

    To Rent Revenue $7,500

    (Being the unearned rent revenue is recorded)

    The computation is shown below:

    = Unearned rent revenue * (number of months : total number of months in a year)

    = $30,000 * (3 months : 12 months)

    = $7,500

    Since the unearned rent revenue is credited for $30,000 but for adjusting for 3 months we have to debit this account and credited the rent revenue account
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Home » Business » Bonita Realty Management Co. received a check for $30,000 on October 1, which represents a one yearadvance payment of rent on an office it rents to a client. Unearned Rental Revenue was credited for the full $30,000.
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