Question

Fragmental co. leased a portion of its store to another company for eight months beginning on october 1, at a monthly rate of $800. fragmental collected the entire $6,400 cash on october 1 and recorded it as unearned revenue. assuming adjusting entries are only made at year-end, the adjusting entry made by fragmental co. on december 31 would be:

Answer 1

If Fragmental Co. continues to collect the standard monthly rate through the end of the calendar year, they would collect an additional $3,200. For the end of the year adjusting entry, this would be added to the $6,400 already collected in lease payments for a total entry of $9,600.