Abdulla, Co. collected 6-months' rent in advance from a tenant on October 1 of the current year. When it collected the cash, it recorded the following entry:Oct. 01 Cash ……………………………………….. 15,000 Rent Revenue Earned ……………... 15,000Assuming Abdulla only prepares adjustments at year-end, prepare the required adjusting entry at December 31 of the current year.
What will be an ideal response?
Dec. 31 Rent Revenue Earned.……………………… 7,500
Unearned Rent Revenue …………….. 7,500
($15,000/6 mo. = $2,500/mo; 3 mo. unearned = 3 * $2,500 = $7,500)
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