Question

One of the offices in ABC’ building is rented out to Mountain Co. for $500 each...

One of the offices in ABC’ building is rented out to Mountain Co. for $500
each month. On September 16, 2020, Mountain Co. paid for the rent from October
through December of 2020 (income statements are issued quarterly). At the end of the year,
Mountain Co. pays rent for another 6 months for January 1, 2021 to June 31, 2021.

Make the appropriate adjusting entry.

Business   Accounting   
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Answer #1

In the books of ABC

Date General Debit Credit
Dec 31, 2020 Cash 3,000
Unearned revenue 3,000
Mar 31, 2021 Unearned revenue 1,500
Rent revenue 1,500
June 30, 2021 Unearned revenue 1,500
Rent revenue 1,500

In the books of Mountain Co.

Date General Debit Credit
Dec 31, 2020 Prepaid rent    3,000
Cash 3,000
Mar 31, 2021 Rent expense 1,500
Prepaid rent    1,500
June 30, 2021 Rent expense 1,500
Prepaid rent    1,500
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