Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1150. Fragmental collected the entire $9200 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:
A. A debit to Rent Revenue and a credit to Cash for $3450.
B. A debit to Unearned Rent and a credit to Rent Revenue for $3450.
C. A debit to Unearned Rent and a credit to Rent Revenue for $5750.
D. A debit to Rent Revenue and a credit to Unearned Rent for $3450.
E. A debit to Cash and a credit to Rent Revenue for $9200.
Answer: B
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