Question

Blue Spruce Corp. received a check for $27840 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $27840. Financial statements will be prepared on July 31. Blue Spruce's should make the following adjusting entry on July 31: debit Unearned Rent Revenue, $4640; credit Rent Revenue, $4640. debit Cash, $27840; credit Rent Revenue, $27840. debit Unearned Rent Revenue, $27840; credit Rent Revenue, $27840. debit Rent Revenue, $4640; credit Unearned Rent Revenue, $4640.

Answer 1

debit Unearned Rent Revenue, $4640; credit Rent Revenue, $4640

Step-by-step explanation:

The journal entry is shown below:

Unearned Rent Revenue ($27,840 ÷ 6 × 1 ) $4,640

To rent revenue $4,640

(Being the unearned rent revenue is recorded)

here the unearned rent revenue is debited as it decreased the libaility and the rent revenue is credited as it increased the assets

Hence, the option a is correct