Question

Adjustment for Unearned Revenue On June 1, 2019, Herbal Co. received $54,450 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 2019. Round your answers to the nearest dollar amount.

Answer 1

Solution:
Date	General Journal	Debit	Credit
December 31, 2019	Unearned rent	31,763
	Rent revenue		31,763
Working Notes:
	Rent earned during 2019 = (Total rent /12 months) x month expired till 31 December
		=(54,450/12) x 7
		=31,762.5
		=31,763
When rent is received , on 1st June , it is unearned revenue for the company , as it is received, so revenue will be recognized as rent period is expired, on 31st December 7 month is expired means 7 month rent revenue is earned by the company.
On 1st June 2019 receiving Journal entry should have done is this
Date	General Journal	Debit	Credit
1 June, 2019	Cash	54,450
	Unearned rent		54,450
on December 31, 2019 , revenue of 7 month rent is earned so
Date	General Journal	Debit	Credit
December 31, 2019	Unearned rent	31,763
	Rent revenue		31,763
Notes:	Balance Unearned rent = 54,450 -31,763 =22,687.
Notes:	The working notes explanation is just given for your understanding.
Please feel free to ask if anything about above solution in comment section of the question.