M. Mabrey received $2,500 from a tenant on December 1 for five months' rent of an office. This rent was for December, January, February, March, and April.
If Mabrey debited Cash and credited Unearned Rental Income for $2,500 on December 1, what necessary adjustment would be made on December 31?
A) Unearned Rental Income 2,000
Rental income 2,000
B) Rental Income 500
Unearned Rental Income 500
C) Unearned Rental income 500
Rental Income 500
D) Rental Income 2,000
Unearned Rental Income 2,000
E) None of the above

Question

Quizplus · Accepted Answer

By December 31, one month of rent has been earned, so $500 should be recognized as rental income, reducing unearned rental income by the same amount.

M Mabrey Received $2,500 from a Tenant on December 1