Angela is a tenant of Bruce.On July 1,Angela paid Bruce $3,600 for 3 months of rent.On July 31,Bruce's adjusting entries will include a debit to:

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When Bruce received the payment,an obligation arose (to provide building space for three months),so it was initially recorded as a liability (called Deferred Revenue).At July 31,one month has passed.The adjusting entry will include a debit to Deferred Revenue (to decrease this liability account)and a credit to Rent Revenue (to increase this revenue account)for $1,200 [or ($3,600 ÷3 months)× 1 month].

Angela Is a Tenant of Bruce