On December 16, 2015, B. Darwin Company recieved $3,600 from S. Dee Company for

Question

On December 16, 2015, B. Darwin Company recieved $3,600 from S. Dee Company for rent of an office owned by B. Darwin Company. The payment covers the period from December 16, 2015 through February 15, 2016. B. Darwin Company recorded this as Unearned Rent when it was recieved on December 16. The adjusting entry on Decemeber 16. The adjusting entry on December 31, would include a:

A. Credit to Rent Revenue of $900

B. Credit to Unearned Revenue of $900

C. Debit to Rent Revenue of $1800

D Debit to Unearned Revenue of $1800

Expain why the correct answer is the correct answer and why the incorrect answers are incorrect.

Explanation / Answer

A. Credit to Rent Revenue of $900 Journal Entries Date Particulars Dr Amt Cr Amt 16-Dec Cash A/C Dr                      3,600.00 To unearned Rent              3,600.00 31-Dec Unearned Rent                         900.00 To Rent revenue                 900.00 (3,600/2 *.5) Rent Revenue is credited since it is income Unearned Rent is debited since liability is reduced

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