On December 1, 2021, the company received $9,000 in cash from another company that is renting office space in Falwell's building. The payment, representing rent for December, January, and February was credited to deferred rent revenue. On December 1, 2021, the company received $9,000 in cash from another company that is renting office space in Falwell's building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $9,000 on December 1, 2021.

Question

Business

Coby

24 December, 09:42

On December 1, 2021, the company received $9,000 in cash from another company that is renting office space in Falwell's building. The payment, representing rent for December, January, and February was credited to deferred rent revenue. On December 1, 2021, the company received $9,000 in cash from another company that is renting office space in Falwell's building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred rent revenue for $9,000 on December 1, 2021.

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Lane Irwin · Answer 1

From all indications, the two rents received have been posted wrongly, I want to believe that you are required to post the adjusting entries, hence my answer below:

The first $9000 was posted to deferred revenue, whereas only two months should have been

First rent:

DR Deferred revenue $3000

CR Revenue $3000

Second Rent

DR Revenue $6000

CR Deferred revenue $6000

Explanation:

The first $9000 was posted to deferred revenue, whereas only two months should have been deferred and December rent recognized as rent.

As far as the second rent is concerned only one month has been earned, as a result the revenue should be credited with just $3000 for December.

This then mean that revenue from the second property has been overstated in December by $6000, this necessitated by adjustment above.