Leyland Reality Company received a check for $15,000 on July 1, which represents

Question

Leyland Reality Company received a check for $15,000 on July 1, which represents a 6 month advance payment of rent of building a rent to a client. Unearned rental revenue was credited for the full $15, 000. Financial statements will be prepared on July 31. Leyland really should make the following adjusting entry on July 31: debit cash, $15,000; credit Rent revenue $15, 000. debit rent revenue, $2, 500; credit unearned rent revenue, $2, 500. debit unearned rent revenue, $2, 500; credit rent revenue, $2, 500.

Explanation / Answer

Solution:

The company received advance rent of $15000 on July 1st which has been credited to Unearned Rental Revenue account.Now at the close of financial statements on July 31st 1/6 th of the rent received has already been earned.So this income earned has to be recorded with the following adjustment entry:

July 31 Unearned Rent Income 2500 Rent Income 2500

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.