Videobusters, Inc. offered books of video rental coupons to its patrons at $40 per book. Each book contained a certain number of coupons for video rentals. During the current period 500 books were sold for $20,000, and this amount was credited to Unearned Rental Revenue. At the end of the period, it was determined that $15,000 worth of book coupons had been used by customers to rent videos. The appropriate adjusting entry at the end of the period would be:

Question

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The appropriate adjusting entry at the end of the period would be to debit Unearned Rental Revenue for $15,000 and credit Rental Revenue for $15,000 because this entry recognizes the revenue earned by the company during the period based on the amount of coupons used by customers to rent videos. Option A would not be correct because it only recognizes a portion of the revenue earned during the period. Option B would not be correct because it represents a double credit to Unearned Rental Revenue, overstating liabilities. Option C would not be correct because it represents a double debit to Rental Revenue, overstating revenue.