Ask Question
9 May, 13:57

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $925. Fragmental collected the entire $7,400 cash on October 1 and recorded it as unearned revenue. The journal entry made by Fragmental Co. at year-end on December 31 would be:

A debit to Cash and a credit to Rent Revenue for $7,400.

A debit to Unearned Rent and a credit to Rent Earned for $4,625.

A debit to Rent Revenue and a credit to Cash for $2,775.

A debit to Rent Revenue and a credit to Unearned Rent for $2,775.

A debit to Unearned Rent and a credit to Rent Earned for $2,775.

+3
Answers (1)
  1. 9 May, 16:53
    0
    A debit to Unearned Rent and a credit to Rent Earned for $2,775.

    Explanation:

    Lease period is 8 months beginning from October 1.

    Monthly rate = $925

    Cash collected = $7,400 (On October 1)

    Amount earned between October 1 and December 31 (3 months)

    = 3 * $925

    = $2,775

    Journal entry made by Fragmental Co. at year-end on December 31 would be

    Debit Unearned Rent $2,775

    Credit Rent revenue $2,775

    Being entries to recognize earned revenue at December 31
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $925. ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers