Business collected S6,600 rent in advance on July 1. Accountant record the journal entry for this collected amount on July 1. This rent is for one year. On December 31, business earned rent for 6 months from July to December. The amount of rent earned for six month is computed below:
Prepaid Rent for 6 months = Total prepaid rent / Duration of rent
= $6,600/12 * 6
= $3,300
So, rent earned by the business is $3,300.
Adjusting entry on December 31 is recorded as shown below:
Date Particulars Debit Credit
Dec. 31 Unearned Revenue $3,300
Rent Revenue $3,300
(To record rent revenue earned that was collected in advance.)
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Home » Business » Business collected S6,600 rent in advance on July 1. Accountant record the journal entry for this collected amount on July 1. This rent is for one year. On December 31, business earned rent for 6 months from July to December.