Vaughn Manufacturing received a check for $24480 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $24480. Financial statements will be prepared on July 31. Vaughn's should make the following adjusting entry on July 31:

a. debit Unearned Rent Revenue, $2,500; credit Rent Revenue, $2,500.

b. debit Rent Revenue, $2,500; credit Unearned Rent Revenue, $2,500.

c. debit Unearned Rent Revenue, $15,000; credit Rent Revenue, $15,000.

d. debit Cash, $15,000; credit Rent Revenue, $15,000.

The question is not correct, find below correct question:

Vaughn Manufacturing received a check for $15,000 on July 1, which represents a 6-month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $15,000. Financial statements will be prepared on July 31. Vaughn Manufacturing should make the following adjusting entry on July 31:

Option A, debit Unearned Rent Revenue, $2,500; credit Rent Revenue, $2,500 is correct

Explanation:

The necessary adjustment on July 31 when financial statements are finalized is that rent of the month of July has been earned and should be recognized as rent revenue.

The amount of $15,000 was for six months, one month rent is $2,500 ($15,000/6)

The necessary adjustment would a credit to rent revenue of $2,500 and a debit to unearned rent revenue for the same amount