Question

Coppers Estate collects rents from several properties. Prior to recording adjusting entries, assume the Rent Income account has a credit balance of $8,000. Two adjustments are to be made at the end of the financial year: (i) an accrual for accrued rent income of $600 is to be recorded; (ii) the Unearned Rent Income account is to be decreased by $200. After processing these adjusting entries the Rent Income account has a balance (ignore GST):

Select one:
a. $7,600
b. $8,600
c. $7,200
d. $8,800

Answer 1

The final balance in the Rent Income account after accounting for the accrued rent income and the adjustment to unearned rent income is $8,800.

Step-by-step explanation:

The student is asking about the effect of adjusting entries on the Rent Income account balance for Coppers Estate. Initially, the Rent Income account has a credit balance of $8,000. Two adjustments need to be made. First, an accrual for accrued rent income of $600 is added to the Rent Income account, increasing the balance. Second, the Unearned Rent Income account, which represents income received but not yet earned, is decreased by $200, which also increases the Rent Income account's balance.

1. Starting balance: $8,000
2. Add accrued rent income: $8,000 + $600 = $8,600
3. Decrease in unearned rent income: $8,600 + $200 = $8,800

Therefore, after these adjustments, the final balance in the Rent Income account is $8,800.