Leyland Realty Company received a check for $15,000 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 $15,000. Financial statements will be prepared on July 31. Leyland Realty should make the following adjusting entry on July 31:

Question

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The $15,000 represents rent for 6 months, so each month $2,500 ($15,000/6) should be recognized as earned revenue. On July 31, Leyland Realty should adjust by debiting Unearned Rent Revenue and crediting Rent Revenue for $2,500.

Leyland Realty Company Received a Check for $15,000 on July