Question

On December 1, 2018, Shamrock Company received $5,400 from Destiny, Inc. for rent of an office owned by Shamrock Company. The payment covers the period from December 1, 2018 through February 28, 2019. Shamrock Company recorded this as Deferred Rent Revenue when it was received on December 1. The adjusting entry on December 31 would include a

A Debit to rent revenue of 2700

B Credit to rent revenue of 1800

C Credit to deferred rent revenue of 1800

D Debit to deferred rent revenue of 2700

On January 1, the Sleepy Monk Coffee Shop paid $39,000 for a full year of rent beginning on January 1. The rent payment was appropriately recorded in the Cash and Prepaid Rent accounts. If financial statements are prepared on January 31, the journal entry to record the adjustment would be:

A Debit prepaid rent and credit rent expense for 3,250

B Debit rent expense and credit prepaid rent for 39,000

C Debit prepaid rent and credit rent expense for 39,000

D Debit rent expense and credit prepaid rent for 3250

Answer 1

1)

Rent received for 3 months = $ 5,400

Rent received for 1 month = $ 1,800

So the adjusting entry on December 31 would include a

B) Credit to rent revenue of $ 1,800

2)

Rent paid for 12 months = $ 39,000

Rent paid for 1 month = $ 3,250

So the adjusting entry on January 31 would include a

D) Debit rent expense and credit prepaid rent for $ 3,250

Please Like the solution if satisfied with the answer and if any query please mention it in comments...thanks