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Murphy Company sublet a portion of its warehouse for five years at an annual rental of $60,000, beginning on May 1, 2014. The tenant, Sheri Charter, paid one year's rent in advance, which Murphy recorded as a credit to Unearned Rent Revenue. Murphy reports on a calendar-year basis. The adjustment on December 31, 2014 for Murphy should be

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  1. Today, 07:07
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    adjusting entry:

    unearned rent revenue 40,000 debit

    rent revenue 40,000 credit

    to record accrued rent revenue

    Explanation:

    contract value for 1 year 60,000

    1 month of rent 60,000 / 12 = 5,000

    How many month past from May to december?

    months through may to december 8 months

    value of 8 month of rent = 40,000

    this will be the earned portion of the contract

    balance unearned rent revenue at year end:

    60,000 - 40,000 = 20,000
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Home » Business » Murphy Company sublet a portion of its warehouse for five years at an annual rental of $60,000, beginning on May 1, 2014. The tenant, Sheri Charter, paid one year's rent in advance, which Murphy recorded as a credit to Unearned Rent Revenue.
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