On September 1, a client paid the company $25,200 cash for six months of rent in advance (the client leased a building and took occupancy immediately). The company recorded the cash as Unearned Rent Revenue.

Question

Business

Cade Walter

2 October, 08:53

On September 1, a client paid the company $25,200 cash for six months of rent in advance (the client leased a building and took occupancy immediately). The company recorded the cash as Unearned Rent Revenue.

+1

Answers (1)

Know the Answer?

Judith · Answer 1

Dr Unearned rent revenue 16,800

Cr Rent revenue 16,800

Explanation:

Period 6 months

Period expired at year end which is from September to December = 4 months

December 31

Dr Unearned rent revenue 16,800

(4/6*25,200)

Cr Rent revenue 16,800

Unearned Rent Revenue was debited in order to reduced Liability while Rent Revenue was credited in order to increase revenue.