Joe received $5,000 in advance for renting part of his building.What is the entry to record the receipt of payment?

Question

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The receipt of payment in advance for rent is recorded as a liability called Unearned Rent. Therefore, the entry to record this transaction would be to debit Cash and credit Unearned Rent. Option A is incorrect because Rent Expense is an expense account and it would be debited only after the rents have been earned. Option B is incorrect because Prepaid Rent is debited when rent is paid in advance by the tenant. Option D is incorrect because Rental Income will be credited only when the rent is earned, not when it's received in advance.

Joe Received $5,000 in Advance for Renting Part of His