The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is
A) $18,000
B) $90,000
C) $54,000
D) $36,000

Question

Quizplus · Accepted Answer

The adjusting entry for unearned rent involves decreasing the unearned rent account and increasing the rental revenue account, since the rent that was previously received as payment now belongs to the current accounting period. The unearned rent that remains at the end of the accounting period is $18,000, so the portion that was earned during the period is $72,000 - $18,000 = $54,000. Therefore, the adjusting entry should be a credit of $18,000 to the unearned rent account and a debit of $18,000 to the rental revenue account. The total amount of the adjusting entry would be $18,000 x 2 = $36,000.

The Unearned Rent Account Has a Balance of $72,000