Asked by Keiona Wedderburn on Jun 15, 2024
Verified
On November 1, Call Center received $4,800 for two years' rent in advance from Garrett Company. The November 30 adjusting entry that Call Center should make is to:
A) debit Rental Income; credit Unearned Rent $4,800.
B) debit Cash; credit Rental Income $4,800.
C) debit Unearned Rent; credit Rental Income $200.
D) debit Unearned Rent; credit Rent Expense $200.
Unearned Rent
Income received for rent that has not yet been earned because the period covered by the payment has not yet passed.
Rental Income
Income received from renting out property or other assets.
Rent Expense
Costs incurred from leasing a property or space for business operations or personal use.
- Acquire knowledge on how to identify and adjust unearned revenues.
- Attain mastery in the technique of adjusting records for a variety of account types and financial transactions.
Verified Answer
AF
Acheampong FelixJun 18, 2024
Final Answer :
C
Explanation :
The correct adjusting entry is to recognize the rent earned for one month out of the twenty-four months for which the payment was received in advance. The monthly rent is $4,800 / 24 = $200. Therefore, the entry debits (decreases) Unearned Rent and credits (increases) Rental Income by $200 to reflect the earned portion of the prepaid rent.
Learning Objectives
- Acquire knowledge on how to identify and adjust unearned revenues.
- Attain mastery in the technique of adjusting records for a variety of account types and financial transactions.
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