On november 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months' rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the unearned rent revenue account. Complete the necessary adjusting entry for december 31 by selecting the account names and dollar amounts from the drop-down menus.

Question

19-09-2018
Business

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On november 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months' rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the unearned rent revenue account. Complete the necessary adjusting entry for december 31 by selecting the account names and dollar amounts from the drop-down menus.

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andromache andromache · Answer 1 · 2018-09-28T13:44:42+02:00

Adjusting entry to record the Rent revenue:

It is given that on November 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months' rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the unearned rent revenue account.

Now on December 31, we need to prepare the adjusting entry to record the Rent Revenue for the period (Nov. 1 to Dec. 31) that is two months. The Rent Revenue for two months shall be 9000*2/3 = $6,000

Hence the adjusting entry to record the Rent revenue shall be as follows:

Unearned Rent Revenue Debit $6,000

Rent Revenue Credit $6,000

(being the adjustment made for Rent Revenue earned)

jepessoa jepessoa · Answer 2 · 2019-12-30T03:39:51+01:00

Answer:

December 31, Year X, journal entry to record rent revenue

Dr Unearned Rent Revenue account 6,000
Cr Rent Revenue account 6,000

Explanation:

Since only two months have passed, the company has to record rent revenue for November and December only.

rent for 3 months = $9,000, therefore each month's rent = $9,000 / 3 = $3,000

the company must record rent revenue for 2 months = 2 x $3,000 = $6,000

Unearned rent revenue is a liability account and since it decreases, it must be debited. Revenue accounts are always credited when they increase.