Question

Bramble Corp. received a check for $17640 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 $17640. Financial statements will be prepared on July 31. Bramble's should make the following adjusting entry on July 31:_______.
a. debit Unearned Rent Revenue, $2,500; credit Rent Revenue, $2,500.
b. debit Rent Revenue, $2,500; credit Unearned Rent Revenue, $2,500.
c. debit Unearned Rent Revenue, $15,000; credit Rent Revenue, $15,000.
d. debit Cash, $15,000; credit Rent Revenue, $15,000.

Answer 1

Explanation:

The adjusting entry is shown below:

Unearned rent revenue Dr $2,940

         To rent revenue $2,940

(Being the unearned rent revenue is recorded)

The computation is shown below

= Advance payment ÷ given number of months

= $17,640 ÷ 6 months

= $2,940

This $2,940 represent the one month payment and the same is to be recorded

This is the answer and the options that are given are wrong