The journal entry to show the effect of the six months of rent collected in advance on November 1, 2019 for Gordon Co is: Debit Cash $31,800; Credit Unearned Rent Revenue $31,800, Unearned rent is $21,200.
<h3>Unearned rent</h3>
a. Entry
Debit Cash $31,800
Credit Unearned Rent Revenue $31,800
b. Unearned rent:
Unearned Rent = 4/6 months
Two months have been paid up to December which means that 4 months are left for pay out of 6 months.
Hence:
Unearned Rent = 4/6 x $31,800
Unearned Rent = $21,200
c. Journal entry
Debit Unearned Rent Revenue $5200
Credit Rent Revenue $5300
(2/12×$31,800)
Therefore the journal entry to show the effect of the six months of rent collected in advance on November 1, 2019 for Gordon Co is: Debit Cash $31,800; Credit Unearned Rent Revenue $31,800, Unearned rent is $21,200.
The complete question is:
On November 1, 2019, Gordon Co. collected $31,800 in cash from its tenant as an advance rent payment on its store location. The six-month lease period ends on April 30, 2020, at which time the contract may be renewed.
a. Record the journal entry to show the effect of the six months of rent collected in advance on November 1, 2019 for Gordon Co.
b. Calculate the amount of unearned rent that should be shown on the December 31, 2019, balance sheet with respect to this lease.
c. Record the journal entry to show the effect of the adjustment that will be made at the end of each month to show the amount of rent "earned" during the month for Gordon Co.
Learn more about unearned rent here:brainly.com/question/14866803
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