QRT Co. received $1,560 advance from Zync Inc. as rent for the use of a building owned by QRT Co. How does this transaction affect QRT's accounts if QRT recognizes a liability on receipt of the rent?

Question

Business

Paris Martinez

17 July, 03:30

QRT Co. received $1,560 advance from Zync Inc. as rent for the use of a building owned by QRT Co. How does this transaction affect QRT's accounts if QRT recognizes a liability on receipt of the rent?

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Answers (1)

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Gloria Peterson · Answer 1

a. Cash is increased, and unearned rent is increased.

Explanation:

Since in the question, it is mentioned that QRT Co. received $1,560 advance from Zync Inc. for the building use.

We know that the cash is received which increases the cash balance but the service is not provided so it would become a liability and recorded as unearned rent.

The unearned rent is increased which show under the current liability side of the balance sheet

Hence, both cash and unearned rent is increased