The unearned rent account has a balance of $36,000. If $4,000 of the $36,000 is unearned at the end of the accounting period, the amount of the adjusting entry is
A) $4,000
B) $40,000
C) $32,000
D) $36,000

Question

Quizplus · Accepted Answer

The adjusting entry is meant to recognize the portion of the unearned rent that has now been earned during the accounting period. Since only $4,000 is still unearned, the amount of rent that has been earned and should be recognized as revenue is $36,000 - $4,000 = $32,000. Therefore, the adjusting entry should be a debit to unearned rent for $32,000 and a credit to rent revenue for $32,000. Choice C represents a debit to unearned rent for $32,000, which is the correct amount for the adjusting entry.

The Unearned Rent Account Has a Balance of $36,000