On November 1,2010 Clyde Corp recieved $6,000 for six months rent in advance.What is the appropriate adjusting entry for December 31,2010?
A)No adjustment needed because no cash paid.
B)Unearned Rent $4,000
Rent Expense $4,000
C)Unearned Rent $2,000
Rent Income $2,000
D)Cash $2,000
Rent Income $2,000

Question

Quizplus · Accepted Answer

Unearned Rent $2,000 Rent Income $2,000 is the correct adjusting entry because Clyde Corp received $6,000 for six months of rent in advance on November 1, 2010. By December 31, 2010, two months of the rent period have passed, so $2,000 (2/6 of $6,000) should be recognized as Rent Income, reducing the Unearned Rent liability by the same amount.

On November 1,2010 Clyde Corp Recieved $6,000 for Six Months