Question

Account BalancesPrior Year-EndCurrent Year-End Rent Receivable$100,000 $125,000 Rent Revenue$500,000 $550,000 The cash received from rent revenue during the current year was: $125,000 $25,000 $500,000 $525,000

Answer 1

The cash received from rent revenue during the current year is calculated by subtracting the increase in Rent Receivable from the Rent Revenue, which results in $525,000.

Step-by-step explanation:

The question concerns the calculation of the cash received from rent revenue during the current year in the context of an accounting exercise. Given the increase in Rent Receivable from $100,000 at the prior year-end to $125,000 at the current year-end and the fact that Rent Revenue is $550,000 for the current year, we can calculate the cash received.

To find the cash received, we should adjust the Rent Revenue by the change in Rent Receivable as follows:

Rent Revenue (current year): $550,000
Rent Receivable (prior year-end): $100,000
Rent Receivable (current year-end): $125,000

This means that Rent Receivable has increased by $25,000 ($125,000 - $100,000), which implies that this amount of Rent Revenue has not been received in cash. Therefore, we subtract this increase from the Rent Revenue to find the cash received as follows:

Cash Received from Rent Revenue: $550,000 (Rent Revenue) - $25,000 (Increase in Rent Receivable) = $525,000

Answer 2

$25,000

Step-by-step explanation:

Account Balances Prior Year-End Current Year-End

Rent Receivable $100,000 $125,000

Rent Revenue $500,000 $550,000

We Know that

Ending balance of Receivable = Beginning balance of Receivable + Rent revenue for the period - Cash received from the customers

$125,000 = $100,000 + ($550,000 - $500,000) - Cash received from the customers

$125,000 = $100,000 + $50,000 - Cash received from the customers

$125,000 = $150,000 - Cash received from the customers

Cash received from the customers = $150,000 - $125,000 = $25,000