Answer:
Debit Unearned Rent Revenue $4,500
Credit Rent revenue $4,500
Explanation:
Amount received in advance is recorded as a debit to cash account and a credit to deferred or unearned revenue. When revenue is earned, the amount earned is credited to revenue and debited to the deferred revenue account.
As such, where REM Real Estate received a check for $27,000 on July 1 which represents a 6 month advance payment of rent on a building, initial entries required are
Debit cash account $27,000
Credit Unearned Rent Revenue $27,000
when financial statements are prepared for July 31, one month revenue would have been earned. This is equivalent to
= 1/6 × $27,000 = $4,500
Adjusting entries required
Debit Unearned Rent Revenue $4,500
Credit Rent revenue $4,500
