Question

On December 16, 2015, B. Darin Company received $5,000 from S. Dee Company for rent of an office owned by B. Darin Company. The payment covers the period from December 16, 2015 through February 15, 2016. B. Darin Company recorded this as Unearned Rent when it was received on December 16. The adjusting entry on December 31 would include a:

Answer 1

Explanation:

The journal entry is shown below:

Unearned rent revenue Dr  $1,250

              To Rent revenue  $1,250

(Being the unearned rent revenue is recorded)

The computation is shown below:

= Received amount ÷ number of months × given number of months

= $5,000 ÷ 2 months × 0.5 months

= $1,250

So it include a debit to unearned rent revenue for $1,250 and credit the rent revenue for $1,250