Question

On September 1, a client paid the company $25,200 cash for six months of rent in advance (the client leased a building and took occupancy immediately). The company recorded the cash as Unearned Rent Revenue.

Answer 1

Answer:

Dr Unearned rent revenue 16,800

Cr Rent revenue 16,800

Step-by-step explanation:

Period 6 months

Period expired at year end which is from September to December = 4 months

December 31

Dr Unearned rent revenue 16,800

(4/6×25,200)

Cr Rent revenue 16,800

Unearned Rent Revenue was debited in order to reduced Liability while Rent Revenue was credited in order to increase revenue.