Lang leased a portion of its store to Pang for 12 months beginning on November 1, at a monthly rate of $400. Pang paid the entire $4,800 on November 1, which Lang recorded as unearned revenue. The journal entry made by Lang at year-end, December 31, would include
A) A debit to Rent Earned for $400
B) A credit to Unearned Rent for $400
C) A debit to Cash for $800
D) A credit to Rent Earned for $800
E) A debit to Unearned Rent for $4,800

Question

Quizplus · Accepted Answer

At year-end, Lang needs to recognize the earned revenue for the month of November and December. Lang will debit Rent Earned for 2 months x $400= $800, to recognize its revenue. The unearned rent of $4,800 has already been recorded as a liability at the time of receipt of cash, and it will not be recorded again in the year-end entry.

Lang Leased a Portion of Its Store to Pang for 12