Whispering Winds Corporation received a check for $22,080 on July 1st which repr

Question

Whispering Winds Corporation received a check for $22,080 on July 1st which represents a 6-month Advance payment of rent on a building kit rinse to a client unearned rent Revenue was credited for the full $27,600 financial statements will be prepared on July 31st whisperings should make the following adjustment on July 31st

a. increase cash $22,080 and increase rent Revenue $22,080
b. decrease unearned rent revenue $22,080 and increase rent Revenue $22,080
c. decrease rent Revenue $3,680 increase unearned rent Revenue $3,680
d. decrease unearned rent revenue $3,680 and increase rent Revenue $3,680

Explanation / Answer

Mothly advance would be 3680(22080/6)

Thus following adjustment on July 31st should be made:

Unearned Revenue Dr 3680

To Revenue account 3680

debit decreases the unearned revenue account, which is a liability account.

credit increases your revenue account

Thus ans D would be correct

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