Question

Sheridan Company received cash of $33300 on September 1, 2020 for one year’s rent in advance and recorded the transaction with a credit to Unearned Rent Revenue. The December 31, 2020 adjusting entry is

Answer 1

Answer and Explanation:

The adjusting journal entry is shown below:

Unearned Rent revenue ($33,300 ÷ 12 × 4 months)  $11,100

        To Rent Revenue $11,100

(Being the unearned rent revenue is recorded)

here we debited the unearned rent revenue as it decreased the liability at the same time it increase the rent revenue as it revenue contains normal credit balance