Final answer:
The December 31, 2014 adjusting entry for Garcia Corporation's cash received for one year's rent in advance should be a debit to Rent Revenue and a credit to Unearned Rent.
Step-by-step explanation:
The adjusting entry for the December 31, 2014, will be a debit to Rent Revenue and a credit to Unearned Rent.
This is because the cash received on August 1, 2014, was recorded as a credit to Rent Revenue, which is incorrect.
The cash received in advance for one year's rent should be recorded as a liability (Unearned Rent) until it is earned over time.
Therefore, the adjusting entry is necessary to correct the error by reducing Rent Revenue and increasing Unearned Rent.