Question

Bonita Realty Management Co. received a check for $32,400 on August 1, which represents a one year advance payment of rent on an office it rents to a client. Unearned Rent Revenue is credited when the realty company collected the rent. Financial statements are prepared on December 31. The appropriate year-end adjusting journal entry that the realty company must record for the first year would be a ______.

Answer 1

Answer:

Explanation:

The adjusted journal entry is shown below:

Unearned rent revenue A/c Dr

      To Rent revenue A/c

(Being the adjusted entry of rent is recorded)

The computation of the rent revenue is shown below:

= Received amount × number of months ÷ (total number of months in a year)

= $32,400 × (5 months ÷ 12 months)

= $13,500

The 5 months is calculated from August 1 to December 31