Question

On June 1, 20Y2, Herbal Co. received $18,900 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 20Y2. If an amount box does not require an entry, leave it blank.

Answer 1

The Journal entry is as follows:

On December 31, 20Y2

Unearned rent revenue A/c Dr. $11,025

To Rent Revenue $11,025

(For earning rent revenue for 7 months ended on December 31, 20Y2)

Workings:

Rent revenue for 7 Months:

= Rent received for 12 months × (7 months ÷ 12 Months)

= $18,900 × (7 months ÷ 12 Months)

= $18,900 × 0.583

= $11,025