Question

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,050. Fragmental collected the entire $8,400 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

Answer 1

Dr Unearned Rent $3,150

Cr Rent Earned $3,150

Step-by-step explanation:

Based on the information given we were told

that the company leased a portion of their store for 8 months which begins on October 1 at a monthly rate of the amount of $1,050 which means that if adjusting Journal entries are only made at year-end, the company adjusting Journal entry on December 31 would be:

Dr Unearned Rent $3,150

Cr Rent Earned $3,150

($1,050*3months)

October 1 to December 31 will gives 3 months