Question

On January 1, Fey Properties collected $7,200 for six months’ rent in advance from a tenant renting an apartment. Fey Properties prepares monthly financial statements. Which of the following describes the required adjusting entry on January 31? A. Debit Unearned rent revenue for $1,200 and Credit Rent revenue for $1,200 B. Debit Cash for $6,000 and Credit Unearned rent revenue for $6,000 C. Debit Rent revenue for $1,200 and Credit Unearned rent revenue for $1,200 D. Debit Cash for $7,200 and Credit Rent revenue for $7,200 E. Debit Unearned rent revenue for $6,000 and Credit Cash for $6,000

Answer 1

A. Debit Unearned rent revenue for $1,200 and Credit Rent revenue for $1,200

Step-by-step explanation:

The Journal entry is shown below:-

1. Cash Dr, $7,200

To unearned rent revenue $7,200

(Being six month advance rent is recorded)

2. Unearned rent revenue Dr, $1,200

($7,200 ÷ 6 months) × 1 month

To Rent revenue $1,200

(Being rent earned is recorded)