The unearned rent account has a balance of $60,000.If $4,000 of the $60,000 is unearned at the end of the accounting period, the amount of the adjusting entry is:
A) $64,000.
B) $56,000.
C) $60,000.
D) $4,000.

Question

Quizplus · Accepted Answer

The adjusting entry should reflect the portion of the unearned rent that has been earned during the accounting period. Since $4,000 is still unearned, we need to subtract that from the total balance of $60,000 to get the amount that has been earned: $60,000 - $4,000 = $56,000. Therefore, the adjusting entry should be a credit to Unearned Rent for $4,000 (to reflect the portion that is still unearned) and a debit to Rent Revenue for $56,000 (to reflect the portion that has been earned). The total of these two amounts is $60,000, which matches the original balance in the Unearned Rent account.

The Unearned Rent Account Has a Balance of $60,000