llles are unpaid and unrecorded. Required For transactions (a) to (0), help Adri
ID: 2413794 • Letter: L
Question
llles are unpaid and unrecorded. Required For transactions (a) to (0), help Adriana prepare the adjusting entries on September 30, 2017. Exercise 3-11 Unearned and accrued revenues L04 Landmark Properties owns and operates an apartment building and prepares annual financial Requred Jounalize the adjusting entry for each of (e) and 0b) and the subsequent entryrequired in (C ments based on a March 31 fiscal year-end. a. The tenants of one of the apartments paid five months' rent in advance on November h 2016, The monthly rental is $2,200 per month. The journal entry credited the Unearned Ren 198Explanation / Answer
Answers
Date
Accounts title & Explanation
Debit
Credit
Working
31-Mar-17 [Requirement (a)]
Unearned rent
11000
$ 2200 per month for 5 months (nov to Mar) = 2200 x 5 = 11000
Rent revenue
$ 11,000.00
(unearned revenue now earned)
Cash was received on 1st Nov, but revenue was not ‘earned’ that time. At 31 Mar, 5 months rent has been actually ‘earned’ and recorded as ‘revenue’ by crediting Rent revenue account.
31-Mar-17 [Requirement (b)]
Accounts receivables
$ 5,300.00
1 month rent = $2650, 2 months rent due to be receivable = 2650 x 2 = 5300
Rent revenue
$ 5,300.00
(rent revenue for 2 months receivable)
2 months’ rent has not been received till 31 Mar, but the same has been ‘earned’ and hence revenue will be recorded by billing rent amount on account.
22-Apr-17 [Requirement (c)]
Cash
$ 7,950.00
[total cash received]
Accounts receivables
$ 5,300.00
[amount of feb and mar rent booked on 31 mar]
Rent revenue
$ 2,650.00
[amount of april rent]
(rent for 3 months received)
$ 5300 = rent for Feb and Mar had already been accounted as REVENUE on 31st march, hence when cash is received for $ 7950, $ 5300 will not be recorded as “Revenue” but is adjusted against Accounts receivables. Only balance will be treated as “revenue” for that period.
Date
Accounts title & Explanation
Debit
Credit
Working
31-Mar-17 [Requirement (a)]
Unearned rent
11000
$ 2200 per month for 5 months (nov to Mar) = 2200 x 5 = 11000
Rent revenue
$ 11,000.00
(unearned revenue now earned)
Cash was received on 1st Nov, but revenue was not ‘earned’ that time. At 31 Mar, 5 months rent has been actually ‘earned’ and recorded as ‘revenue’ by crediting Rent revenue account.
31-Mar-17 [Requirement (b)]
Accounts receivables
$ 5,300.00
1 month rent = $2650, 2 months rent due to be receivable = 2650 x 2 = 5300
Rent revenue
$ 5,300.00
(rent revenue for 2 months receivable)
2 months’ rent has not been received till 31 Mar, but the same has been ‘earned’ and hence revenue will be recorded by billing rent amount on account.
22-Apr-17 [Requirement (c)]
Cash
$ 7,950.00
[total cash received]
Accounts receivables
$ 5,300.00
[amount of feb and mar rent booked on 31 mar]
Rent revenue
$ 2,650.00
[amount of april rent]
(rent for 3 months received)
$ 5300 = rent for Feb and Mar had already been accounted as REVENUE on 31st march, hence when cash is received for $ 7950, $ 5300 will not be recorded as “Revenue” but is adjusted against Accounts receivables. Only balance will be treated as “revenue” for that period.
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