Green Realty Company received a check for $30,000 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 $30,000. Financial statements will be prepared on July 31. Green Realty should make the following adjusting entry on July 31:

Question

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The adjusting entry recognizes one month's worth of rent revenue earned from the advance payment. Since the payment covers 6 months, $30,000/6 = $5,000 is earned in July. Therefore, Unearned Rent Revenue is debited and Rent Revenue is credited for $5,000.

Green Realty Company Received a Check for $30,000 on July