Sanborn Company rents space to a tenant for $3,700 per month. The tenant current

Question

Sanborn Company rents space to a tenant for $3,700 per month. The tenant currently owes rent for November and December. The tenant has agreed to pay the November, December, and January rents in full on January 15 and has agreed not to fall behind again. The adjusting entry needed on December 31 is:

Debit Rent Receivable, $7,400; credit Rent Earned, $7,400.

Debit Unearned Rent, $7,400; credit Rent Earned, $7,400.

Debit Unearned Rent, $3,700; credit Rent Earned, $3,700.

Debit Rent Receivable, $3,700; credit Rent Earned, $3,700.

Debit Rent Receivable, $11,100; credit Rent Earned, $11,100.

Explanation / Answer

In the question the rent is due for two months $3700 each and as it is due that means it is earned and the rent is not received yet so rent receivable is debited. Now tenant will pay the rent in january so adjusting entry will be for 2 months Novemeber and December. So rent is receivable for two months amd it is earned for those two months so it is revenue

Debit Rent Receivable, $7400; credit Rent Earned, $7400.

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