Final answer:
The company must correct the omission by making an adjusting entry to debit Rent Revenue and credit Unearned Rent for the amount applicable to December and January, thus aligning revenue recognition with the period in which the rent was earned.
Step-by-step explanation:
The question relates to the accounting treatment of advance rent received by a company and the need to adjust entries before closing the books. When a company receives advance rent, it needs to recognize this amount as unearned revenue until the period for which the rent is applicable has passed. In the given scenario, the company needs to correct the omission of not making an adjusting entry to Rent Revenue to accurately reflect the earned and unearned portions of the advance rent received for the months of November, December, and January.
To correct the omission at the end of the year 2010, an adjusting entry should debit the Rent Revenue account by the amount of rent that pertains to the subsequent year(s), which in this case would be for December and January, and credit Unearned Rent. This ensures that revenue is recognized in the period in which it is earned.