Action Real Estate received a check for $18k on Jul 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent was credit for the full $18k. Financial statements will be prepared on Jul 31. Action Real Estate should make the following adjusting entry on Jul 31

Since in the given question, the action real estate has received a check of $18k on July 1 which represents a 6 month advance payment. That means, we have to calculate for full year payment instead of 6 month.

So,

For a year = (Amount * 12 months) : 6 months

= $18 k * 12 : 6

= $36 k

Now, we have to find for 1 month because the adjusting entry was made on July 31 and the check is received on July 1.

So,

1 month = Yearly Amount : Total months in a year

= $36 k : 12 months

=$3 k

Hence, the adjusting entry would be:

Unearned Rent A/c Dr $3 k

To Rental revenue $3 k

(Being adjusted entry recorded)