REM Real Estate received a check for $27,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $27,000. Financial statements will be prepared on July 31. REM Real Estate should make the following adjusting entry on July 31:
A) Debit Unearned Rent Revenue, $4,500; Credit Rent Revenue, $4,500.
B) Debit Rent Revenue, $4,500; Credit Unearned Rent Revenue, $4,500.
C) Debit Unearned Rent Revenue, $27,000; Credit Rent Revenue, $24,000.
D) Debit Cash, $27,000; Credit Rent Revenue, $27,000.

Question

Quizplus · Accepted Answer

The adjusting entry recognizes one month's rent revenue out of the 6-month advance payment. $27,000 for 6 months means $4,500 per month. Therefore, debit Unearned Rent Revenue and credit Rent Revenue for $4,500.

REM Real Estate Received a Check for $27,000 on July