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In: Accounting

Rental receipts for the period July 1, 2013, through June 30, 2014, were collected on June...

Rental receipts for the period July 1, 2013, through June 30, 2014, were collected on June 30, 2013. The effects of these economic events on the 2013 financial statements for unearned revenue and rent revenue are ?

Unearned Revenue Rent Revenue
I. Increase Increase
II. Increase Decrease
III. Decrease No effect
IV. Decrease Increase

Solutions

Expert Solution

Rent is received in advance as on June 30, 2013 for the period of July 2013 to June 2014.

Journal entry of the same is passed as below,

Cash                                       Debit

Unearned Revenue            Credit

It means rent received will increase our cash and increase our unearned revenue.

At year end rent will be credited and unearned services will be debited and journal entry of the same will be passed as below,

Unearned Revenue                     Debit

Rent Revenue                              Credit

As per above explanation,

Answer = Option IV

       Unearned Revenue                             Rent Revenue

      Decrease                                                  Increase

ekkarill92 answered 2 months ago
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