Green Realty Company received a check for $24,000 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 $24,000.Financial statements will be prepared on July 31.Green Realty should make the following adjusting entry on July 31:
A)debit Unearned Rent Revenue, $4,000; credit Rent Revenue, $4,000.
B)debit Rent Revenue, $4,000; credit Unearned Rent Revenue, $4,000.
C)debit Unearned Rent Revenue, $24,000; credit Rent Revenue, $24,000.
D)debit Cash, $24,000; credit Rent Revenue, $24,000.

Question

Quizplus · Accepted Answer

The $24,000 represents rent for 6 months, so $4,000 is earned each month ($24,000/6). On July 31, Green Realty should recognize one month's rent as earned by debiting Unearned Rent Revenue and crediting Rent Revenue for $4,000.

Green Realty Company Received a Check for $24,000 on July